Article 14 of the Saudi Income Tax Law
المادة 14 من نظام ضريبة الدخل · الفصل الخامس: مصاريف تحقيق الدخل
The article allows deducting bad debts arising from sales of goods or services previously declared as revenue, once written off the books with suitable evidence that collection is impossible under the Regulations.
Official text (Arabic)
This article has not been amended since the law was issued.
أ - يجوز للمكلف حسم الديون المعدومة الناتجة عن بيع بضاعة أو خدمات سبق التصريح بها إيرادا في دخل المكلف الخاضع للضريبة .
ب - يجوز حسم الدين المعدوم عند شطبه من دفاتر المكلف متى توفر دليل الإثبات المناسب على استحالة تحصيله وفقا لما تحدده اللائحة .
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 14 explained in plain English
This article deals with a common situation: a seller recorded sales as revenue and paid tax on them, then could not collect their price. Here the Law allows deducting the bad debt from the tax base, but under specified conditions:
- The debt must arise from a sale of goods or services.
- It must have been previously declared as revenue in the taxpayer's taxable income; a debt that was never included in revenue is not deducted under this article.
- It must be written off the taxpayer's books.
- There must be suitable evidence that collection is impossible, as the Implementing Regulations specify.
The Law does not state in this article what kind of evidence is accepted but leaves it to the Regulations. So a customer's mere delay or the difficulty of collection is not enough; the evidence of impossibility that the Regulations specify is required.
This article differs from Article 15, which does not allow deducting reserves and provisions, except provisions for doubtful debts in banks; the deduction here is for a bad debt actually written off, not for an estimated provision for potential debts. To know what counts as sufficient evidence in your case, it is advisable to consult a lawyer specialized in tax and commercial matters.
Practical example
A supply company in Riyadh sold goods for SAR 80,000 and included the amount in its revenue in the year's return, then it became clear that the customer cannot be collected from. The company may deduct the amount when it writes it off its books, provided it has suitable evidence that collection is impossible as the Regulations specify.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 14 of the Saudi Income Tax Law
Can a bad debt be deducted from income tax?
Yes, if it arose from a sale of goods or services previously declared as revenue and was written off the books, with suitable evidence that collection is impossible under the Regulations.
Is a customer's delay in paying enough to deduct the debt?
The text requires suitable evidence that collection is impossible as the Regulations specify, not mere delay.
May a debt that was not previously recorded as revenue be deducted?
No. The article requires that the debt arise from a sale previously declared as revenue in taxable income.
More articles on Deductible Expenses and Losses
- Article 11
The article allows donations paid during the tax year to public bodies or licensed non-profit charities permitted to receive donations to be deducted when determining the tax base.
يجوز لتحديد الوعاء الضريبي لكل مكلف حسم التبرعات المدفوعة خلال السنة الضريبية إلى هيئات عامة ، أو جمعيات خيرية مرخص لها بالمملكة لا تهدف إلى الربح، ويجوز لها تل
- Article 12
The article allows deducting all ordinary and necessary expenses of earning taxable income, paid or accrued during the tax year, except capital expenses and what the Law prohibits.
جميع المصاريف العادية والضرورية لتحقيق الدخل الخاضع للضريبة ، سواء كانت مسددة أو مستحقة ، والمتكبدة خلال السنة الضريبية هي مصاريف جائزة الحسم عند احتساب الوعاء
- Article 13
The article lists the expenses that may not be deducted from the tax base, such as expenses unrelated to income, amounts to partners and their relatives, entertainment, fines, bribes and income tax.
لا يجوز حسم المصاريف التالية : أ - المصاريف غير المرتبطة بتحقيق الدخل الخاضع للضريبة . ب - أي مبالغ مدفوعة أو مزايا مقدمة للمساهم أو الشريك أو لأي قريب لهما إذا
- Article 15
The article prohibits deducting any reserves or provisions, except provisions for doubtful debts in banks, and leaves it to the Regulations to set the rules and controls for these provisions.
لا يجوز حسم أي احتياطيات أو مخصصات خلاف مخصصات الديون المشكوك في تحصيلها في البنوك ، وتحدد اللائحة قواعد وضوابط تحديد هذه المخصصات .
- Article 16
The article allows deducting research and development expenses connected with earning taxable income, and bars deducting the purchase of land or research equipment, as equipment is depreciated under Article 17.
يجوز حسم مصاريف البحوث والتطوير المرتبطة بتحقيق الدخل الخاضع للضريبة ، ولا يجوز حسم مصاريف شراء الأرض أو المعدات التي تستخدم في أغراض البحث حيث تستهلك المعدات و
- Article 20
The article allows deducting an employer's contributions for an employee to a statutory pension fund up to 25% of the employee's income, and does not allow deducting the employee's own contributions.
أ - يجوز حسم مساهمات صاحب العمل لصالح المستخدم في صندوق تقاعد نظامي مؤسس وفقا لأنظمة المملكة. ب - لا يتجاوز الحسم المسموح به بمقتضى الفقرة ( أ ) من هذه المادة ع
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.