Article 31 of the Saudi Income Tax Law
المادة 31 من نظام ضريبة الدخل · الفصل السابع: قواعد إضافية لتحديد الوعاء الضريبي
The article requires including in the taxpayer's total income any payment from which he benefits directly or indirectly, and any payment disposed of on his instructions, if it would be income had it been paid to him directly.
Official text (Arabic)
This article has not been amended since the law was issued.
يجب أن يشتمل إجمالي دخل المكلف على أي دفعة يستفيد منها المكلف مباشرة أو غير مباشرة ، وكذلك أي دفعة يتم التصرف بها وفقا لتعليماته إذا كانت تلك الدفعة تعد دخلا للمكلف لو دفعت له مباشرة .
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 31 explained in plain English
This article aims to prevent taking income out of tax through indirect payment. It requires the taxpayer's total income to include two kinds of payments:
- Any payment from which the taxpayer benefits directly or indirectly; it is not required that the taxpayer receive the amount in his hand, and it is enough that its benefit accrues to him.
- Any payment disposed of on his instructions, such as where the taxpayer asks the paying party to transfer the amount to another person or to use it for a purpose he specifies.
But the text limits this by an important condition: the payment must be one that would be income of the taxpayer had it been paid to him directly. The test is the nature of the amount: if it would be income had the taxpayer received it himself, it remains income even if paid indirectly or to another on his instructions.
This article complements other rules for determining the base, such as Article 30, which requires income and the base to be calculated in Saudi riyals, and Article 32, which provides that compensation amounts received take the character of what they compensate for.
To assess whether particular payment arrangements fall within this provision, it is advisable to consult a lawyer specialized in tax and commercial matters.
Practical example
A resident foreign contractor in Jeddah completed work for a company and asked it, instead of paying him the fees, to pay his office rent installment directly to the landlord. This amount enters the contractor's total income, because it was paid on his instructions and would have been income for him had he received it himself.
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 31 of the Saudi Income Tax Law
Is an amount paid to another person on my instructions income for me?
Yes. If the payment would be income for you had it been paid to you directly, it enters your total income.
Must I receive the amount myself for it to count as income?
No. Total income includes any payment from which the taxpayer benefits directly or indirectly, provided that it would be income had it been paid to him directly.
More articles on Taxable Income and Exemptions
- Article 5
The article lists the cases in which income is treated as arising from a source in the Kingdom, and provides that the place of payment does not determine the source of income.
أ - يعد الدخل متحققا من مصدر في المملكة في أي من الحالات الآتية : 1 - إذا نشأ عن نشاط تم في المملكة. 2 - إذا نشأ عن ممتلكات غير منقولة موجودة في المملكة ، بما ف
- Article 9
The article sets how to calculate profit or loss on disposing of assets, the basis of their cost, and the cases of gifting, inheritance, compulsory disposal and transfer to personal use.
أ - الربح أو الخسارة المتحققة من التخلص من الأصل هو الفرق بين التعويض المستلم عن الأصل وأساس التكلفة له. ب - لا يحتسب ربح أو خسارة عند التخلص من أصل قابل للاسته
- Article 10
The article exempts from income tax gains on selling securities traded on the Saudi financial market under the Regulations' rules, and gains on disposing of property that is not an activity asset.
تعفى الدخول الآتية من ضريبة الدخل : أ - المكاسب الرأسمالية المتحققة من التخلص من الأوراق المالية المتداولة في السوق المالية بالمملكة وفقا للضوابط التي تحددها ال
- 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 32
The article provides that compensation amounts received by the taxpayer take the character of what they compensate for in the tax treatment.
تأخذ مبالغ التعويض المستلمة صفة المعوض عنه.
- Article 39
The article sets the cost basis of property contributed to a partnership, and adjusts the cost basis of its assets up or down when a partner leaves with a gain or loss on disposing of his share.
أ - أساس التكلفة الأولية للممتلكات المقدمة لشركة الأشخاص تساوي أساس التكلفة للشريك الذي قدمها . ب - إذا خرج شريك من شركة أشخاص واستلم توزيعا يجعله يحقق ربحا من
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.