Article 48 of the Saudi Income Tax Law
المادة 48 من نظام ضريبة الدخل · الفصل العاشر: ضريبة استثمار الغاز الطبيعي
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%.
Official text (Arabic)
This article has not been amended since the law was issued.
يحدد سعر ضريبة استثمار الغاز الطبيعي عن أية سنة ضريبية وفقا لمعدل العائد الداخلي للتدفقات النقدية السنوية التراكمية للمكلف المستمدة من نشاط استثمار الغاز الطبيعي ، ويكون سعر الضريبة على وعاء ضريبة استثمار الغاز الطبيعي للمكلف وفقا للجدول الآتي :
سعر ضريبة استثمار الغاز
معدل العائد
الداخلي
سعر ضريبة استثمار الغاز
معدل العائد
الداخلي
سعر ضريبة استثمار الغاز
معدل العائد
الداخلي
سعر ضريبة استثمار الغاز
معدل العائد
الداخلي
82.39
17.0
57.50
14.0
32.61
11.0
30.00
8.0 أو أقل
82.63
17.1
58.87
14.1
32.87
11.1
30.15
8.1
82.85
17.2
60.24
14.2
33.15
11.2
30.17
8.2
83.04
17.3
61.59
14.3
33.46
11.3
30.18
8.3
83.22
17.4
62.93
14.4
33.80
11.4
30.20
8.4
83.39
17.5
64.24
14.5
34.17
11.5
30.22
8.5
83.54
17.6
65.51
14.6
34.57
11.6
30.25
8.6
83.67
17.7
66.75
14.7
35.01
11.7
30.27
8.7
83.80
17.8
67.95
14.8
35.49
11.8
30.30
8.8
83.91
17.9
69.10
14.9
36.00
11.9
30.33
8.9
84.01
18.0
70.21
15.0
36.56
12.0
30.37
9.0
84.10
18.1
71.26
15.1
37.16
12.1
30.41
9.1
84.19
18.2
72.27
15.2
37.80
12.2
30.45
9.2
84.26
18.3
73.22
15.3
38.50
12.3
30.50
9.3
84.33
18.4
74.12
15.4
39.24
12.4
30.55
9.4
84.40
18.5
74.97
15.5
40.03
12.5
30.60
9.5
84.45
18.6
75.76
15.6
40.88
12.6
30.67
9.6
84.50
18.7
76.50
15.7
41.78
12.7
30.74
9.7
84.55
18.8
77.20
15.8
42.73
12.8
30.81
9.8
84.59
18.9
77.84
15.9
43.74
12.9
30.90
9.9
84.63
19.0
78.44
16.0
44.79
13.0
30.99
10.0
84.67
19.1
79.00
16.1
45.90
13.1
31.09
10.1
84.70
19.2
79.51
16.2
47.05
13.2
31.20
10.2
84.73
19.3
79.99
16.3
48.25
13.3
31.33
10.3
84.75
19.4
80.43
16.4
49.49
13.4
31.46
10.4
84.78
19.5
80.83
16.5
50.76
13.5
31.61
10.5
84.80
19.6
81.20
16.6
52.07
13.6
31.78
10.6
84.82
19.7
81.54
16.7
53.41
13.7
31.96
10.7
84.83
19.8
81.85
16.8
54.76
13.8
32.15
10.8
84.85
85.00
19.9
20.0 أو أكثر
82.13
16.9
56.13
13.9
32.37
10.9
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 48 explained in plain English
This article does not impose a fixed rate for the natural gas investment tax, but a graduated rate that changes each tax year according to the taxpayer's cumulative profitability.
Basis for determining the rate: the internal rate of return on the taxpayer's cumulative annual cash flows derived from natural gas investment activity. The resulting rate is applied to the base of the natural gas investment tax determined by Article 47. The method of calculating annual cash flows is set out in Article 49.
Features of the table attached to the article:
- If the internal rate of return is 8.0% or less, the rate is 30.00%.
- At a rate of 10.0% the rate is 30.99%, and at 12.0% it is 36.56%.
- At 14.0% the rate is 57.50%, at 15.0% it is 70.21%, and at 16.0% it is 78.44%.
- At 18.0% the rate is 84.01%.
- If the rate reaches 20.0% or more, the rate is 85.00%.
The table moves in steps of 0.1% in the rate of return, with a specific rate for each step. The higher the taxpayer's cumulative return, the higher the tax rate, and vice versa.
Refer to the full table in the official text for the exact rate at each return. To calculate the internal rate of return in a specific case, it is advisable to consult a lawyer specializing in tax and zakat or a financial advisor.
Practical example
A company working in natural gas investment had an internal rate of return of 8% on its cumulative cash flows in a given year, so the gas investment tax rate on its base is 30%. In a later year the rate rose to 15%, so the rate under the table becomes 70.21%.
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 48 of the Saudi Income Tax Law
What is the rate of the natural gas investment tax?
It is graduated according to the taxpayer's internal rate of return, from 30% if the rate of return is 8% or less, up to 85% if it reaches 20% or more.
On what basis does the gas tax rate change?
On the basis of the internal rate of return on the taxpayer's cumulative annual cash flows derived from natural gas investment activity.
Is the gas tax rate the same every year?
No. The rate is determined for each tax year according to that year's internal rate of return under the table.
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 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 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.