General Guideline

Zakat and other taxes There is no special exemption applicable to Zakat and other taxes (real estate transaction tax and excise tax) for activities within the zone, as the normal rules for collecting zakat, excise tax and calculating real estate transaction tax apply if the transaction is taxable in accordance with the provisions of the real estate transaction tax. (12) Article (8) of Special Tax Rule 5. Transactions between established entities in the zone, the mainland and anti-tax avoidance provisions The established entities in the zone are independent of the entities on the mainland. In the event of transactions between the established entity in the zone and related person in the mainland, the established entity in the zone shall disclose the transfer of any activities from the mainland as a transaction between related persons in accordance with the provisions of Article (3) of the transfer pricing bylaws. In addition, the established entities in the zone shall provide, upon request, information regarding the profits realized from activities previously practiced in the mainland and any new activities carried out in the zone. It should also be noted that tax incentives do not apply to activities previously conducted on the mainland by the established entity itself or any person associated with it, unless the transfer of such activities is disclosed in accordance with their fair market value. In addition to the imposition of appropriate penalties, the penalties stipulated in the Investment Regulations or any other regulations issued by the Competent Authority in accordance with the provisions of combating tax avoidance stipulated in the tax rules of the zone(13)shall be applied in any of the following cases: 1. If the established entity has knowingly or intentionally submitted false or misleading declarations or information to the Authority. 2. If the established entity has intentionally misapplied the Tax Rules or misused the Tax incentives to obtain or assist another in obtaining a tax benefit or advantage in respect of non-prescribed activities 3. If the established entity has facilitated Payments to non-residents on behalf of Persons not eligible for the Tax incentives. There are other provisions regarding combating avoidance and evasion in the Kingdom’s tax laws that can also be applied in cases of tax avoidance. (13) Article 5 of the Special Tax Rules. 6. Tax procedures 6.1 Registration Established entities, for tax purposes, are obliged to register with the Authority (ZATCA) in accordance with the relevant provisions stipulated under tax laws. If a branch is registered as an established entity, then the branch shall have a Tax Identification Numbers (TIN) separate from the registered main branch/parent company based in the mainland. If the established entity has opened a branch on the mainland, this branch shall be registered separately with the Authority (ZATCA) and has its own Tax Identification Numbers (TIN) without being granted any of tax incentives distributed among given Zone. 6.2 Tax/ Zakat Base, Returns Fillings, and Payment of Tax/ Zakat Established entities in the Zone shall fulfil the stipulated obligations to file tax returns/ declarations and shall pay any owed amounts, or any amounts not covered by incentives and exemptions in accordance with Tax Laws and the Implementing Regulation for the Collection of Zakat.