Article 33 of the Saudi Income Tax Law
المادة 33 من نظام ضريبة الدخل · الفصل السابع: قواعد إضافية لتحديد الوعاء الضريبي
The article provides that what the taxpayer recovers of an expense, loss or bad debt previously deducted is counted in total income in the year of recovery, and an expense is recovered when the basis for payment falls away.
Official text (Arabic)
This article has not been amended since the law was issued.
أ - إذا استرد المكلف مصروفا أو خسارة أو دينا معدوما سبق السماح به ، يحسب المبلغ المسترد من ضمن إجمالي الدخل في سنة الاسترداد ، ويأخذ صفة الدخل المتعلق بالمصروف .
ب - لغرض هذه المادة ، يعد المصروف مستردا حينما ينتفي أساس الصرف .
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 33 explained in plain English
This article deals with a case in which an amount is deducted from the tax base and the amount later returns to the taxpayer. The rule is that what previously reduced the tax is returned to income when recovered.
- What the rule covers (paragraph a): the taxpayer recovers an expense, a loss or a bad debt that was previously allowed, that is, previously deducted. If the amount was not deducted before, it does not fall within this rule.
- The treatment: the recovered amount is counted in total income in the year of recovery, not in the year in which it was originally deducted, and it takes the character of income relating to the expense.
- When an expense is considered recovered (paragraph b): when the basis for payment falls away, that is, when the reason for which the expense was deducted ceases.
This rule agrees with Article 32, which provides that compensation amounts received take the character of what is compensated for.
A prominent practical application is where the taxpayer collects a debt he had previously deducted as a bad debt, so the amount collected enters the income of the year of collection. To determine the year of recovery and its effect in a particular case, it is advisable to consult a lawyer specialized in tax and commercial matters.
Practical example
A company in Riyadh deducted in a previous year a bad debt of SAR 50,000 after writing it off, and then the customer paid the amount in the current year. The amount is counted in the company's total income in the year of recovery.
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 33 of the Saudi Income Tax Law
What if I collect a debt I previously deducted as a bad debt?
The recovered amount is counted in total income in the year of recovery, and it takes the character of income relating to the expense.
When is an expense considered recovered?
When the basis for payment falls away.
Is the return for the year in which the expense was deducted amended?
The text provides for counting the recovered amount in total income in the year of recovery.
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.