Article 47 of the Saudi Income Tax Law
المادة 47 من نظام ضريبة الدخل · الفصل العاشر: ضريبة استثمار الغاز الطبيعي
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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 مبالغ الريع والإيجار السطحي من المصاريف جائزة الحسم .
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 47 explained in plain English
This article sets out the base on which the natural gas investment tax is calculated.
The formula: Base = gross income referred to in Article 46 − expenses deductible under the Law.
Gross income (Article 46) is what is earned from selling, exchanging or converting natural gas, its liquids and condensates, including sulfur and other products, in addition to any incidental or non-operating income linked to the main activity, including income from using surplus capacity in the facilities.
Deductible expenses: The article refers to the expenses the Law allows to be deducted and does not list them itself, but it expressly provides that:
- Royalty amounts count as deductible expenses.
- Surface rent likewise counts as a deductible expense.
Once the base is determined, Article 48 sets the tax rate applied to it according to the internal rate of return on the taxpayer's cumulative annual cash flows from natural gas investment activity, under a table attached to it.
Because determining deductible expenses depends on other provisions of the Law, it is advisable to consult a lawyer specializing in tax and zakat or a certified accountant when preparing the return.
Practical example
A gas company earned gross income of SAR 500 million from selling gas and sulfur, and paid royalty and surface rent among its deductible expenses. The royalty and surface rent are deducted, along with the other expenses the Law allows to be deducted, from the SAR 500 million, and the result is the base of the natural gas investment tax.
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 47 of the Saudi Income Tax Law
How is the base of the natural gas investment tax calculated?
It is the gross income referred to in Article 46 less the expenses deductible under the Law.
Is royalty deducted from the gas tax base?
Yes. The article provides that royalty amounts and surface rent are among the deductible expenses.
Does the article set the rate of the gas investment tax?
No. It sets only the base. The rate is set by Article 48 according to the internal rate of return.
Articles this article refers to
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 45
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.
أ - يقصد بالعمل في مجال استثمار الغاز الطبيعي أعمال التنقيب عن الغاز الطبيعي وإنتاجه وتجميعه وتنقيته ومعالجته ، وتجزئة سوائل الغاز الطبيعي، وإنتاج وتجميع مكثفات
- 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 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.