Article 51 of the Saudi Income Tax Law
المادة 51 من نظام ضريبة الدخل · الفصل العاشر: ضريبة استثمار الغاز الطبيعي
The article makes the gas investment tax base separate for each exploration and production contract or agreement with the Government, and separate from the taxpayer's other activities, with a separate return and audited accounts for each.
Official text (Arabic)
This article has not been amended since the law was issued.
أ - لغرض حساب ضريبة استثمار الغاز الطبيعي يعتبر وعاء ضريبة استثمار الغاز الطبيعي للمكلف عن كل عقد أو اتفاقية تنقيب عن الغاز وإنتاجه مع الحكومة مستقلا عن وعاء ضريبة استثمار الغاز الطبيعي الخاص بأي عقد أو اتفاقية أخرى للتنقيب والإنتاج ، وعلى المكلف تقديم إقرار ضريبي وحسابات ختامية مدققة مستقلة عن كل عقد أو اتفاقية تنقيب عن الغاز الطبيعي وإنتاجه .
ب - يعتبر وعاء ضريبة استثمار الغاز الطبيعي للمكلف مستقلا عن الوعاء الضريبي عن باقي أوجه نشاطه الأخرى التي لا تتصل بعمله في مجال استثمار الغاز الطبيعي ، وعلى المكلف تقديم إقرار ضريبي وحسابات ختامية مدققة عن عمله في مجال استثمار الغاز الطبيعي منفصلة عن أوجه نشاطه الأخرى.
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 51 explained in plain English
This article imposes the principle of separateness in calculating the natural gas investment tax at two levels.
(a) Separateness of each contract:
- The taxpayer's natural gas investment tax base under each contract or agreement with the Government for exploring for and producing gas is treated as separate from its base under any other contract or agreement.
- The taxpayer must submit a separate tax return and audited final accounts for each contract or agreement.
It follows that the results of each contract are calculated individually, and the base of one contract is not combined with the base of another for this purpose.
(b) Separateness of gas activity from other activity:
- The natural gas investment tax base is treated as separate from the tax base of the taxpayer's other activities that are not connected with its work in gas investment.
- The taxpayer must submit a tax return and audited final accounts for its work in gas investment that are separate from its other activities.
This is linked to Article 50, which applies income tax to the gas investment tax base and deducts it from the gas tax due, and to Article 52, which subjects income from processing or fractionation in a licensed independent plant, and from transport for others in a licensed independent pipeline, to income tax under paragraph (b) of Article 7. To organize accounts and returns under this chapter, it is advisable to consult a lawyer specializing in tax and zakat or a certified accountant.
Practical example
An energy company signed two contracts with the Government for exploring for gas in two different areas, and also has another activity in engineering services. It must calculate the gas investment tax base for each contract separately and submit a return and audited accounts for each, and it must keep the accounts of the gas activity separate from the engineering services activity.
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 51 of the Saudi Income Tax Law
Does a gas company submit one return for all its contracts?
No. A separate tax return and audited final accounts must be submitted for each contract or agreement with the Government for exploring for and producing gas.
Is gas activity combined with the taxpayer's other activities for tax purposes?
No. The gas investment tax base is separate from the base of other unconnected activities, with a separate return and accounts.
Must the accounts of gas contracts be audited?
Yes. The text requires audited final accounts for each contract and for the gas activity separately.
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 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
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.