Article 28 of the Saudi Income Tax Law
المادة 28 من نظام ضريبة الدخل · الفصل السابع: قواعد إضافية لتحديد الوعاء الضريبي
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.
Official text (Arabic)
This article has not been amended since the law was issued.
يوزع الدخل أو المصاريف المتعلقة بممتلكات مشتركة على الشركاء وفقا لحصص الملكية فيها.
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 28 explained in plain English
This article deals with jointly owned property, that is, assets owned by more than one person together, such as real estate or equipment owned by several partners.
The rule: the income arising from this property, and likewise the expenses relating to it, are allocated among the partners in accordance with their ownership shares in it.
In practice this has the following results:
- Each partner is credited with his share of the income in proportion to his share, and this share enters the calculation of his own tax base, if he is among those subject to tax.
- Each partner bears his share of the expenses relating to the property in the same proportion, so none of them deducts expenses exceeding his share.
- The standard of allocation is the ownership share as the text specifies.
This article is in Chapter Seven on additional rules for determining the tax base, alongside other rules such as valuation in Article 29, which provides for valuing the market value of property, services or non-cash benefits at the date they are recorded in the books.
The article does not address how the shares are determined or the case where they differ during the year, so if there is a dispute about the shares or ownership overlaps, it is advisable to consult a lawyer specialized in tax and commercial matters.
Practical example
Three resident foreign partners own a commercial building in Khobar with shares of 50%, 30% and 20%, and its net rent for the year was SAR 600,000. Each of them is credited with income and expenses according to his share: SAR 300,000, SAR 180,000 and SAR 120,000 of the net.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
How we write and review contentCommercial & Corporate Law lawyers: ask a specialist about your case
Describe your situation briefly and we'll suggest a lawyer who specialises in this law
Commercial & Corporate Law lawyers
Lawyers who handle this kind of case
Ibrahim Al Salem Law Firm
Active contributor
Dr. Ali Al-Rubaie Law Office and Ittihad Al-Asr Legal Company
Frequently asked questions about Article 28 of the Saudi Income Tax Law
How is the income of jointly owned property calculated for tax?
Income and expenses relating to jointly owned property are allocated among the partners in accordance with their ownership shares in it.
Can one partner deduct all the expenses of the jointly owned property?
The text allocates the expenses among the partners according to their ownership shares, so each partner is credited with his share of them.
More articles on Tax Accounting Rules
- Article 22
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.
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
- 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
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.