Article 52 of the Saudi Income Tax Law
المادة 52 من نظام ضريبة الدخل · الفصل العاشر: ضريبة استثمار الغاز الطبيعي
The article subjects the taxpayer to income tax under paragraph (b) of Article 7 on income from processing or fractionating gas in a licensed independent plant, and from transporting it for others in a licensed independent pipeline.
Official text (Arabic)
This article has not been amended since the law was issued.
يخضع المكلف لضريبة الدخل المقررة بموجب الفقرة (ب) من المادة السابعة من هذا النظام وذلك :
أ - عن دخله المتحقق من معالجة الغاز الطبيعي أو تجزئته في معمل مستقل مرخص له.
ب - عن دخله المتحقق من نقل الغاز الطبيعي للغير في خط أنابيب مستقل مرخص له.
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 52 explained in plain English
This article deals with two types of income connected with natural gas and subjects them to the income tax set under paragraph (b) of Article 7, which provides that the tax rate on the base of a taxpayer working in natural gas investment is 20%.
The two cases:
- (a) Income earned from processing or fractionating natural gas in a licensed independent plant.
- (b) Income earned from transporting natural gas for others in a licensed independent pipeline.
The conditions the text states: the plant or pipeline must be independent and licensed, and in the case of transport, the transport must be for others. The text does not define what independence means, and does not name the licensing authority.
This article comes after Article 51, which separates the gas investment tax base for each contract and from other activities, and before Article 53, which exempts oil-producing companies from the provisions of this chapter in their areas of operation or concession. For reference, paragraph (e) of Article 7 provides that a person working in both oil and hydrocarbon production and gas investment pays the sum of the tax on his two bases.
To find out how this article applies to a specific processing or transport project, it is advisable to consult a lawyer specializing in tax and zakat.
Practical example
A company in Jubail owns a licensed independent plant for fractionating gas liquids and provides the fractionation service to other producers. Its income from this activity is subject to income tax at 20% under paragraph (b) of Article 7. The same applies to a company that transports gas for others through a licensed independent pipeline.
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 52 of the Saudi Income Tax Law
What tax applies to income from processing gas in an independent plant?
It is subject to the income tax set by paragraph (b) of Article 7, which is 20%, if the plant is independent and licensed.
Is income from transporting gas for others subject to income tax?
Yes. If the transport is in a licensed independent pipeline, the income from it is subject to income tax under paragraph (b) of Article 7.
Does the article name the authority that licenses plants and pipelines?
No. The text only requires that the plant or pipeline be independent and licensed.
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 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.