The tax system is transparent and clear and its objective is to support foreign investment.
The Deputy Director of the Audit Department of the General Authority for Zakat and Tax in the Eastern Region, Akram AlTawal, stated that the taxes that currently imposed are the income tax, selective tax, and value added tax, in addition to Zakat, each of which a special system are implemented professionally by the Authority, after the introduction of systems advanced mechanism. He stressed that the aim of all this is to develop domestic investments and increase the non-oil revenues of the state.
On Monday 30/4/2018, a workshop was held at Asharqia Chamber that entitled, "Mechanism of extracting Zakat certificate for small and medium enterprises." During this workshop, Akram AlTawal said that the money that is subject to the Zakat collection system is the capital and its proceeds, all imports, and profits of individuals and companies from trade, industry, personal business, property, as well as financial and commercial transactions and sale of shares. He pointed out that the system of Zakat collection went to exempt some institutions and bodies from Zakat in spite of practicing their activities in the Kingdom, e.g., public institutions that are public funds, national insurance companies, Public Investment Fund, Pension Fund, and some international institutions such as the Islamic Development Bank and the Gulf Bank.
As for income tax, he said that it is a mandatory (non-punitive) tax deduction determined by the state and obliges people to perform it to the state in a final and free manner that to enable the state to carry out its economic, social and political functions. He explained that the income tax rates are one relative price 20% on the income of individuals and companies. Capital gains tax is carried out in accordance with the system that insure clarity and transparency in determining the duties and rights of the taxpayer and the interest. This system applies the introduction of moderate relative tax rates to attract capital; allows the transfer of losses forward for an indefinite period; the use of group consumption; the accelerated depreciation of assets; adopts the method of self-linking; the adoption of the deduction tax for the first time in the Kingdom; activates the mechanism of collection and commitment where the income tax system provides clear procedures to combat tax evasion; and the right of the taxpayer and the interest to appeal to the Administrative Court if the investment is for the first time. He added that the tax is not imposed on the Saudi unless he is a resident outside the Kingdom, has economic activity at home, has a permanent residence or tenant, and is present in the country at least 30 days a year.
He said that mixed companies pay zakat on the Saudi or Gulf side, and an income tax on the foreign side, each has a mechanism for calculating Zakat or tax. He explained that if the Zakat or tax container is negative- the institution is losing-, it does not have zakat or tax. In addition, donations made by institutions for any purpose determined as expenses under specific conditions in which the donations should be made within the Kingdom for non-profit charitable organizations. Such expenses, as in the case of other expenses, must be supported by documents.
On selective goods tax, AlTawal said it was a tax imposed on goods that had a detrimental effect on public health and the environment, or luxury goods of varying proportions. It is imposed by the State as a result of its commitment to the World Health Organization's demands to reduce its consumption. It was implemented in the second quarter of 2017 and includes tobacco products, energy drinks (100%) and soft drinks (50%).
On value added tax, AlTawal explained that it is a 5% indirect tax that is imposed on all goods and services purchased and sold by the establishments, with some exceptions. He said that a number of activities have been excluded from the tax such as international transport, real estate activity, health care, the import of medicines, and government and private education. Generally speaking, all government services are excluded from the tax.
The assistant computer unit, Walid Khalifa, explained that the submission of the tax return is currently in accordance with a smart automated system that allows the taxpayer to complete its transactions in full, which is based on accumulated experience passed by the Authority in order to contribute to the transfer of services from the paper method to the automated method that is fastest and most short For time and effort. He also said that what the user receives through the portal is the same in the branch through paper transactions; starting with opening the file with the exception that he has the possibility to modify the file and submit the acknowledgment automatically in less time and more speed. He pointed out that notification of receipt of the tax return is sent to the taxpayer automatically, especially as it communicates with all concerned government agencies to reveal whether the information is right or false, and allows the taxpayer to amend and to object.
