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September 19, 2023

Saudi Arabia approves amendments to Income Tax Bylaws and Zakat Regulations

  • Saudi Arabia has approved the amendments to the Income Tax Bylaws and Zakat Regulations.
  • Amendments to the Income Tax Bylaws relate primarily to interest charges on capital assets, employers' retirement fund contributions, appeals processes and withholding tax rates.
  • Under the amendment to the Zakat Regulations, Zakat guidelines and rulings are now binding on the Zakat, Tax and Customs Authority (ZATCA) subject to certain conditions.
  • Taxpayers and zakat payers should consider the amendments and comply with the applicable. provisions.

Executive summary

On 12 September 2023, Ministerial Resolution No. 25 dated 08/01/1445H (26 July 2023) was electronically published in the Official Gazette, introducing amendments to the Income Tax Bylaws (ITBL) and Zakat Regulations (ZR). This Ministerial Resolution was issued following a public consultation on the draft amendments to the ITBL and ZR.

Detailed discussion


In May 2023, the ZATCA published the proposed draft amendments to the ITBL and ZR for public consultation on its official website. After the consultation process, certain amendments have now been approved and are made part of the law, which is effective from the date of publication in the Official Gazette.

Highlights of the amendments

Key takeaways from the amendments include:

  • ITBL: Allowable interest charge — Paragraph (2) of Article (9)

The amendment clarifies that interest capitalized, relating to capital assets, should be excluded from the formula used for computing the allowable interest limit.

  • ITBL: Employer's contribution in retirement funds — Subparagraph (2)(n) of Paragraph (8) of Article (9)

The amendment clarities that "unfunded liabilities" mean the amount of employer's contribution as at the beginning of the fiscal year, which has not been paid until the end of that fiscal year.

  • ITBL: Appeal process — Article (60) and deletion of Articles (61) and (62)

The amended Article (60) clarifies that objections and appeals are to be dealt with in reference to the Tax Disputes and Violations Committee procedures that were issued under the Royal Decree. No 2604 dated 21/04/1441H. Consequently, the redundant provisions of Articles (61) and (62) have been deleted.

  • ITBL: Withholding tax (WHT) rates — Paragraph (1) of Article (63)

The higher rate of 15% for WHT on payments to related parties has been reduced to 5% in relation to payments for technical and consulting services, and for international telecommunication services.

  • ITBL: Payments for air tickets, air freight and maritime freight — Paragraph 4 of Article (63)

Payments to nonresidents for international travel departing from KSA should be subject to 5% WHT.

  • Amendments to the ZR: Rulings and guidelines — Addition to Article (30) in Chapter (9) of the final provisions

Subject to certain conditions, the advance rulings and guidelines will now be binding on the ZATCA, except under the following conditions:

  • Actual facts, activities and transactions are different that those stated in the ruling application
  • Material facts have been omitted or misrepresented
  • Transactions do not meet assumptions or requirements set out in the guide and ruling

Zakat guidelines and rulings will be applied prospectively from the date of issuance, publication, and amendment.

Zakat guidelines and rulings cannot provide any exception, exemption, privilege, deduction, or any other tax advantage other than provided in the ZR.


Taxpayers, zakat payers and businesses should consider the amendments made with respect to the ITBL and ZR and seek to comply as applicable.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Professional Services (Professional LLC), Riyadh

Ernst & Young Professional Services (Professional LLC), Jeddah

Ernst & Young Professional Services (Professional LLC), Al Khobar

Ernst & Young LLP (United States), Middle East Tax Desk, New York

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor