Article 45 of the Saudi Income Tax Law
المادة 45 من نظام ضريبة الدخل · الفصل العاشر: ضريبة استثمار الغاز الطبيعي
The article defines working in natural gas investment, what is meant by gas transport and what it excludes, and what is meant by gas condensates, for the purposes of the natural gas investment tax.
Official text (Arabic)
This article has not been amended since the law was issued.
أ - يقصد بالعمل في مجال استثمار الغاز الطبيعي أعمال التنقيب عن الغاز الطبيعي وإنتاجه وتجميعه وتنقيته ومعالجته ، وتجزئة سوائل الغاز الطبيعي، وإنتاج وتجميع مكثفات الغاز ، ونقل الغاز الطبيعي وسوائله ومكثفات الغاز.
ب - يقصد بالنقل ، نقل الغاز الطبيعي من معامل التنقية إلى معامل المعالجة وإلى معامل التجزئة ، أو نقله من أي من هذه المعامل إلى مرافق المستهلكين ، وكذلك نقل مكثفات الغاز وسوائله ، ولا يشمل ذلك شبكات التوزيع المحلية وخطوط الأنابيب التي ينشئها غير منتج للغاز بعد نقاط البيع الرسمية .
ج - يقصد بمكثفات الغاز المكثفات الموجودة بصورة طبيعية ، وهي المواد الهيدروكربونية الموجودة بحالة غازية أحادية في المكامن التي تكون درجة حراراتها الأصلية فيما بين درجة الحرارة الحرجة ودرجة الحرارة القصوى حيث يمكن أن توجد حالتان للمادة جنبا إلى جنب والتي تستخرج من الآبار المنجزة في مكامن مكثفات الغاز الطبيعي وتصبح سائلة في الظروف القياسية لدرجة الحرارة والضغط.
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 45 explained in plain English
After Article 44 imposed the natural gas investment tax on everyone working in this field, this article sets the scope of this work through three definitions.
(a) Working in natural gas investment includes:
- Exploring for natural gas and producing, collecting, purifying and processing it.
- Fractionating natural gas liquids.
- Producing and collecting gas condensates.
- Transporting natural gas, its liquids and gas condensates.
(b) What is meant by transport: transporting gas from purification plants to processing and fractionation plants, or from any of these plants to consumers' facilities, as well as transporting gas condensates and liquids. Transport does not include:
- Local distribution networks.
- Pipelines built by a non-producer of gas after the official points of sale.
(c) Gas condensates: these are naturally occurring condensates, that is, hydrocarbon materials that exist in a single gaseous phase in reservoirs whose original temperature lies between the critical temperature and the maximum temperature at which two phases of matter can coexist, and that are extracted from wells in gas condensate reservoirs and become liquid under standard conditions of temperature and pressure.
Article 46 builds on these definitions to determine the income arising from this work. To classify a specific activity under these definitions, it is advisable to consult a lawyer specializing in tax and zakat.
Practical example
A company in the Eastern Province transports gas from a purification plant to a processing plant; this transport falls within the definition of working in natural gas investment. A company that does not produce gas and built a pipeline after the official point of sale to deliver gas to a factory does not fall within the definition of transport in this article.
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 45 of the Saudi Income Tax Law
Which activities count as working in natural gas investment?
Exploring for, producing, collecting, purifying and processing gas, fractionating its liquids, producing and collecting gas condensates, and transporting gas, its liquids and condensates.
Do local gas distribution networks fall within the definition of transport?
No. The text excludes local distribution networks and pipelines built by a non-producer of gas after the official points of sale.
What are gas condensates under the Income Tax Law?
Naturally occurring hydrocarbon materials in a gaseous phase in certain reservoirs, which are extracted from gas condensate reservoir wells and become liquid under standard conditions of temperature and pressure.
More articles on Natural Gas Investment Tax
- Article 44
The article imposes a tax called the natural gas investment tax on anyone engaged in investing in natural gas, its liquids and its condensates within the Kingdom, its exclusive economic zone or its continental shelf.
تفرض على كل شخص يعمل في مجال استثمار الغاز الطبيعي وسوائله ومكثفات الغاز داخل المملكة أو منطقتها الاقتصادية الخالصة أو جرفها القاري ضريبة تسمى ضريبة استثمار الغ
- Article 46
The article defines income from natural gas investment as the gross income from selling the gas, its liquids, condensates and products, and any incidental or non-operating income linked to the main activity.
الدخل الناتج من العمل في مجال استثمار الغاز الطبيعي ، هو إجمالي الدخل المتحقق من بيع أو تبادل أو تحويل الغاز الطبيعي وسوائله ومكثفات الغاز بما في ذلك الكبريت وا
- Article 47
The article sets the base of the natural gas investment tax as the gross income in Article 46 after deducting deductible expenses, and treats royalty and surface rent as deductible.
وعاء ضريبة استثمار الغاز الطبيعي هو إجمالي الدخل المشار إليه في المادة السادسة والأربعين من هذا النظام مخصوما منه المصاريف جائزة الحسم بموجب هذا النظام ، وتعتبر
- Article 48
The article ties the rate of the natural gas investment tax to the internal rate of return on the taxpayer's cumulative annual cash flows, under a table that starts at 30% and ends at 85%.
يحدد سعر ضريبة استثمار الغاز الطبيعي عن أية سنة ضريبية وفقا لمعدل العائد الداخلي للتدفقات النقدية السنوية التراكمية للمكلف المستمدة من نشاط استثمار الغاز الطبيع
- Article 49
The article explains how annual cash flows are calculated by adjusting the natural gas investment tax base, adding back certain items and deducting others.
يتم حساب التدفقات النقدية السنوية عن طريق تعديل وعاء ضريبة استثمار الغاز الطبيعي كما يلي : أ - إعادة إدراج الخسائر التشغيلية المرحلة من السنوات السابقة . ب - إع
- Article 50
The article applies income tax at 20% under paragraph (b) of Article 7 to the gas investment tax base, and then deducts the income tax paid from the gas investment tax due.
أ - تطبق ضريبة الدخل وفقا للفقرة (ب) من المادة السابعة من هذا النظام على وعاء ضريبة استثمار الغاز الطبيعي للمكلف الخاضع لضريبة استثمار الغاز الطبيعي . ب - يحسم
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.