Article 29 of the Saudi Income Tax Law
المادة 29 من نظام ضريبة الدخل · الفصل السابع: قواعد إضافية لتحديد الوعاء الضريبي
The article provides that property, services and non-cash benefits are valued at market value on the date they are recorded in the books, without regard to restrictions on transferring ownership of the asset to the employee or service provider.
Official text (Arabic)
This article has not been amended since the law was issued.
أ - إذا تضمن احتساب الوعاء الضريبي أو إجمالي الدخل ممتلكات أو خدمات أو مزايا أخرى غير نقدية تحسب القيمة السوقية لها في تاريخ التسجيل في الدفاتر للأغراض الضريبية .
ب - تحدد القيمة السوقية للأصل غير النقدي المنقول ملكيته إلى المستخدم أو إلى أي شخص يقدم الخدمات دون اعتبار لأي قيود على نقل الملكية .
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 29 explained in plain English
This article deals with the case where non-cash items enter the calculation of income or the tax base, such as a taxpayer receiving an asset, service or benefit for his work instead of money.
- The rule (paragraph a): if calculating the tax base or total income includes property, services or other non-cash benefits, their market value is calculated on the date they are recorded in the books for tax purposes. What counts is market value on that date, not the value the two parties agree on or the original cost.
- Assets transferred to an employee or service provider (paragraph b): if ownership of a non-cash asset is transferred to the employee or to any person who provides services, its market value is determined without regard to any restrictions on transferring ownership. The valuation is not reduced on the ground that a condition prevents selling or disposing of the asset for a certain period.
The purpose of this provision is to prevent reducing taxable income by payment in kind or by a low valuation of benefits. It is among the additional rules for determining the tax base, alongside provisions such as currency conversion in Article 30, which provides for calculating income and the base in Saudi riyals at the exchange rate announced by the Saudi Arabian Monetary Authority on the date of the transaction.
To assess market value in a particular case, it is advisable to consult a lawyer specialized in tax and commercial matters.
Practical example
A company in Riyadh gave a resident foreign consultant a car in return for his services; its market value on the date of recording in the books was SAR 120,000, with a condition preventing him from selling it for a year. The car is counted in his income at its market value of SAR 120,000, without regard to the condition preventing sale.
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 29 of the Saudi Income Tax Law
How are in-kind benefits valued for tax?
Property, services or non-cash benefits are valued at market value on the date they are recorded in the books for tax purposes.
Is an asset's valuation reduced if a restriction prevents selling it?
No. The market value of an asset transferred to an employee or service provider is determined without regard to any restrictions on transferring ownership.
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.