Article 81 of the Saudi Income Tax Law
المادة 81 من نظام ضريبة الدخل · الفصل السادس عشر: أحكام ختامية
The article sets transitional provisions for the value of assets purchased before the Law took effect, and bars carrying forward operating losses incurred before Council of Ministers Resolution No. 3 of 1421 AH or during a tax exemption period.
Official text (Arabic)
This article has not been amended since the law was issued.
أ - في حالة شراء أصل في سنة ضريبية سابقة على دخول هذا النظام حيز التنفيذ ، فإن القيمة التي تضاف إلى المجموعة الملائمة هي تكلفة الأصل ناقصا أي قسط استهلاك حصل عليه المكلف في السابق.
ب - لا يجوز ترحيل الخسائر التشغيلية المتكبدة قبل نفاذ قرار مجلس الوزراء ذي الرقم (3) والتاريخ 5 / 1 / 1421 هـ .
ج - لا يجوز ترحيل الخسائر التشغيلية التي يتكبدها المكلف خلال فترة الإعفاء الضريبي .
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 81 explained in plain English
When a new law is issued, questions arise about situations that arose before it, and this article answers three of them:
1) Assets purchased before the Law (paragraph a): If the taxpayer purchased an asset in a tax year before the Law came into force, the value added to the appropriate depreciation group is the cost of the asset less any depreciation installment the taxpayer previously obtained. The asset is therefore not depreciated again at its full cost, but at what remains of it after what was previously depreciated.
2) Old losses (paragraph b): Operating losses incurred before Council of Ministers Resolution No. (3) dated 5/1/1421 AH took effect may not be carried forward. These losses are not carried to following years to reduce taxable income.
3) Losses in an exemption period (paragraph c): Operating losses the taxpayer incurs during a tax exemption period may not be carried forward.
This article follows Article 80, which provides that the Law takes effect ninety days after its publication in the Official Gazette, which is the date against which the phrase "this Law coming into force" is measured. Because the application of these provisions depends on the purchase dates, losses and exemption periods of each business, it is advisable to consult a lawyer specializing in tax cases or a qualified accountant.
Practical example
A company in Riyadh bought a machine before the Law came into force at a cost of SAR 1,000,000, and obtained depreciation on it of SAR 400,000. When the Law is applied, the machine is added to its group at a value of only SAR 600,000, not at its full cost.
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 81 of the Saudi Income Tax Law
May old operating losses be carried forward?
Operating losses incurred before Council of Ministers Resolution No. (3) dated 5/1/1421 AH took effect may not be carried forward.
Are losses incurred during a tax exemption period carried forward?
No. Paragraph (c) provides that operating losses the taxpayer incurs during a tax exemption period may not be carried forward.
How are assets purchased before the Law took effect depreciated?
They are added to the appropriate group at their cost less any depreciation installment the taxpayer previously obtained.
More articles on Deductible Expenses and Losses
- Article 11
The article allows donations paid during the tax year to public bodies or licensed non-profit charities permitted to receive donations to be deducted when determining the tax base.
يجوز لتحديد الوعاء الضريبي لكل مكلف حسم التبرعات المدفوعة خلال السنة الضريبية إلى هيئات عامة ، أو جمعيات خيرية مرخص لها بالمملكة لا تهدف إلى الربح، ويجوز لها تل
- Article 12
The article allows deducting all ordinary and necessary expenses of earning taxable income, paid or accrued during the tax year, except capital expenses and what the Law prohibits.
جميع المصاريف العادية والضرورية لتحقيق الدخل الخاضع للضريبة ، سواء كانت مسددة أو مستحقة ، والمتكبدة خلال السنة الضريبية هي مصاريف جائزة الحسم عند احتساب الوعاء
- Article 13
The article lists the expenses that may not be deducted from the tax base, such as expenses unrelated to income, amounts to partners and their relatives, entertainment, fines, bribes and income tax.
لا يجوز حسم المصاريف التالية : أ - المصاريف غير المرتبطة بتحقيق الدخل الخاضع للضريبة . ب - أي مبالغ مدفوعة أو مزايا مقدمة للمساهم أو الشريك أو لأي قريب لهما إذا
- Article 14
The article allows deducting bad debts arising from sales of goods or services previously declared as revenue, once written off the books with suitable evidence that collection is impossible under the Regulations.
أ - يجوز للمكلف حسم الديون المعدومة الناتجة عن بيع بضاعة أو خدمات سبق التصريح بها إيرادا في دخل المكلف الخاضع للضريبة . ب - يجوز حسم الدين المعدوم عند شطبه من د
- Article 15
The article prohibits deducting any reserves or provisions, except provisions for doubtful debts in banks, and leaves it to the Regulations to set the rules and controls for these provisions.
لا يجوز حسم أي احتياطيات أو مخصصات خلاف مخصصات الديون المشكوك في تحصيلها في البنوك ، وتحدد اللائحة قواعد وضوابط تحديد هذه المخصصات .
- Article 16
The article allows deducting research and development expenses connected with earning taxable income, and bars deducting the purchase of land or research equipment, as equipment is depreciated under Article 17.
يجوز حسم مصاريف البحوث والتطوير المرتبطة بتحقيق الدخل الخاضع للضريبة ، ولا يجوز حسم مصاريف شراء الأرض أو المعدات التي تستخدم في أغراض البحث حيث تستهلك المعدات و
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.