Article 22 of the Saudi Income Tax Law
المادة 22 من نظام ضريبة الدخل · الفصل السادس: قواعد المحاسبة الضريبية
The article sets the tax year as the State's fiscal year, allows using another twelve-month period under the Regulations, and deals with changing the year and with groups of related companies.
Official text (Arabic)
This article has not been amended since the law was issued.
أ - السنة الضريبية هي السنة المالية للدولة .
ب - يجوز للمكلف استخدام فترة اثني عشر شهرا مختلفة عما ورد في الفقرة (أ) من هذه المادة كسنة ضريبية وفقا للضوابط التي تحددها اللائحة .
ج - إذا غير المكلف سنته الضريبية ، تعامل الفترة الفاصلة بين آخر سنة ضريبية كاملة قبل التغيير وتاريخ ابتداء السنة الضريبية الجديدة ، كفترة مالية قصيرة ومستقلة ، ويجوز أن تكون السنة الأولى للمكلف الجديد أو السنة الأخيرة للمكلف في حالة التوقف أو التصفية سنة مالية قصيرة مستقلة ما لم ينص على أن تكون سنة طويلة وفقا لنظام الشركات .
د - تستخدم مجموعات الشركات المرتبطة وكما ورد تعريفها في المادة الرابعة والستين من هذا النظام نفس السنة الضريبية .
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 22 explained in plain English
This article sets out the period of time for which income tax is calculated:
- The rule (paragraph a): the tax year is the State's fiscal year.
- The alternative (paragraph b): the taxpayer may use a different twelve-month period as the tax year, in accordance with the rules set by the Regulations; the article does not state these rules.
- Changing the year (paragraph c): if the taxpayer changes his tax year, the period between the last full tax year before the change and the start of the new year is treated as a separate short financial period.
- The first and last year: the first year of a new taxpayer, or the last year on cessation or liquidation, may be a separate short financial year, unless it is provided that it be a long year under the Companies Law.
- Related companies (paragraph d): groups of related companies, as Article 64 defines them, use the same tax year.
Article 64 defines companies or bodies under common control as those controlled at 50% or more by the same person or related persons; control in capital companies means ownership of voting rights or their value, and in partnerships ownership of income or capital rights, directly or through subsidiaries.
Determining the tax year matters because many provisions of the Law are calculated on its basis, such as expenses incurred during the year. To choose the suitable year for your establishment or to change it, it is advisable to consult a lawyer specialized in tax and commercial matters.
Practical example
A company in Riyadh whose tax year used to end on 31 December decided, under the Regulations' rules, to have its year end on 30 June. The period from 1 January to 30 June of the year of the change is treated as a separate short financial period.
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 22 of the Saudi Income Tax Law
What is the tax year in Saudi Arabia?
The rule is that it is the State's fiscal year, and the taxpayer may use a different twelve-month period under the rules set by the Regulations.
What happens when the tax year is changed?
The period between the last full year before the change and the start of the new year is treated as a separate short financial period.
May companies in one group use different tax years?
No. Groups of related companies, as Article 64 defines them, use the same tax year.
Articles this article refers to
More articles on Tax Accounting Rules
- Article 23
The article requires the taxpayer to use an accounting method that shows his income clearly, states when the cash or accrual basis is used, and requires the Authority's approval to change accounting policy.
أ - يجب أن تبين طريقة المحاسبة التي يتبعها المكلف دخله بوضوح . ب - يحدد إجمالي الدخل والمصاريف للشركة المقيمة ولأي مكلف يحتفظ أو ملزم نظاما بالاحتفاظ بالدفاتر ا
- Article 24
The article provides that a person using the cash basis records income when it is received or when it is ready to be received, and expenses when they are paid.
يدون المكلف الذي يستخدم الأساس النقدي في دفاتره وسجلاته الدخل المستلم عند استلامه أو عندما يكون جاهزا للاستلام ، والمصاريف المسددة عند دفعها.
- Article 25
The article provides that a person using the accrual basis records income and expenses when they fall due, and sets when an amount becomes payable to or by the taxpayer.
أ - يدون المكلف الذي يستخدم مبدأ الاستحقاق الدخل والمصاريف عند استحقاقها . ب - يصبح المبلغ واجب الدفع إلى المكلف إذا حق للمكلف استلامه حتى لو تأجل التسديد أو تم
- Article 26
The article provides that, for a person using the accrual basis, income and expenses of long-term contracts are calculated by the proportion of work completed during the year, and defines a long-term contract.
أ - يحتسب الدخل والمصاريف المتعلقة بعقد طويل الأجل للمكلف الذي يستخدم مبدأ الاستحقاق على أساس نسبة العمل المنجز خلال السنة الضريبية . ب - تحدد نسبة العمل المنجز
- Article 27
The article requires anyone holding inventory to keep stocktaking records, allows deducting the cost of goods sold, and sets how it is calculated and how closing stock is valued at the lower of cost or market.
أ - على المكلف الذي يحتفظ بمخزون ، فتح سجلات جرد له والاحتفاظ بتلك السجلات. ب - تحسم تكلفة البضاعة المباعة خلال السنة الضريبية . ج - تتحدد تكلفة البضاعة المباعة
- Article 28
The article provides that income and expenses relating to jointly owned property are allocated among the partners in accordance with their ownership shares in it.
يوزع الدخل أو المصاريف المتعلقة بممتلكات مشتركة على الشركاء وفقا لحصص الملكية فيها.
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.