Article 24 of the Saudi Income Tax Law

المادة 24 من نظام ضريبة الدخل · الفصل السادس: قواعد المحاسبة الضريبية

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.

Official text (Arabic)

This article has not been amended since the law was issued.

يدون المكلف الذي يستخدم الأساس النقدي في دفاتره وسجلاته الدخل المستلم عند استلامه أو عندما يكون جاهزا للاستلام ، والمصاريف المسددة عند دفعها.

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 24 explained in plain English

This article explains how the cash basis works in recording income and expenses for tax purposes:

Income: it is recorded when it is received, or when it is ready to be received. Actual receipt alone is not the test; if the amount is available for the taxpayer to receive, it is recorded even if he has not collected it.
Expenses: they are recorded when they are actually paid.

Who may use this basis is determined by Article 23: a natural person may use it unless his total income from activity in a year exceeds the amount set in the Regulations, in which case he must use the accrual basis in the following years. A company that keeps commercial books or is required to must use the accrual basis, and otherwise it may use either basis.

The cash basis differs from the accrual basis regulated by Article 25, under which income and expenses are recorded when they fall due even if payment is deferred.

The practical effect is that the timing of receipt and payment decides the tax year in which income or an expense falls for someone using the cash basis. To determine what suits your activity, it is advisable to consult a lawyer specialized in tax and commercial matters.

Practical example

A resident foreign designer working for his own account in Riyadh and using the cash basis completed a job in December and collected his fees the following January. He records this income when he receives it, or when it becomes ready to be received if that is before collection.

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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