Saudi Arabia

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Business Practices

General information: Executive Planet
US Commercial Service – Doing Business in Saudi Arabia
Communicaid
Opening hours and days: The Saudi working week begins on Saturday and ends on Wednesday. Thursday and Friday are the official days of rest. Office hours tend to be 0900-1300 and 1630-2000 (Ramadan 2000-0100), with some regional variation.

Public holidays

Islamic New Year	Thursday, 10 January
Ashura	Saturday, 19 February
Prophet's Birthday	Thursday, 20 March
National Day	Tuesday, 23 September
Eid Al Fitr	Thursday, 2nd October
Eid Al Adha	Tuesday, 9th December

Holiday compensation: Muslim Holidays that occur on Friday are generally observed on the following Saturday.

Periods when companies usually close

Eid al-Fitr holidays	Observed at the end of the holy month of Ramadan (month of fasting). The dates vary and are governed by the Islamic lunar calendar.
Eid al-Adha holidays	Observed when pilgrims arrive from around the world to perform the Hajj. The dates vary and are governed by the Islamic lunar calendar.

Accounting Rules

Tax year: The financial year begins on 1st January and ends on 31st December of each year.
Accounting standards: Saudi Arabia uses accounting standards issued by Saudi Organization for Certified Public Accountants (SOCPA) . In case an issue is not covered by SCOPA standards, IFRS (International Financial Reporting Standards) standards are used. Banks operating in the Kingdom generally used IFRS.
Accounting regulation bodies: SOCPA
Saudi Accounting Association
Accounting reports: The companies need to maintain their accounting reports, especially 'balance sheet and ‘profit and loss account'.
Publication requirements: The ‘balance sheet' and ‘profit and loss account' need to be published every fiscal year. Many Saudi companies are making their financial reports available on internet.
Professional accountancy bodies: SOCPA
Certification and auditing: Only licensed auditors, by Ministry of Commerce and Industry can perform auditing in Saudi Arabia.

The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) is an Islamic international autonomous non-profit corporate body that prepares accounting, auditing, governance, ethics and Shari'a standards for Islamic financial institutions and the industry.
Accounting news: EINNews.com
Saudia Online

Tax Rates

Consumption taxes

Nature of the tax: There is no consumption tax or VAT or sales tax in Saudi Arabia.
Other consumption taxes: Other consumption taxes are levied at the national level and the local level e.g. gasoline tax, aviation fuel tax, liquefied petroleum gas tax, petroleum tax, motor vehicle tax, etc.

Corporate taxes

Company tax: 20%
Tax rate for foreign companies: Resident and Non-resident companies: A resident company is taxed on income arising in the Kingdom, while as a non-resident company carrying out its business activities in the Kingdom through a permanent establishment is taxed on income arising from or related to the permanent establishment.

A corporation is resident if it is registered in accordance with the Regulations for Companies in Saudi Arabia or if it is headquartered in the Kingdom.

Taxable Income: Income tax is levied on a non-Saudi's share in a resident company, while as ‘Zakat' is levied on the Saudi share. Citizens of GCC (Gulf Co-operation Council) countries are treated as Saudis.

The tax base for a resident company is the non-Saudi partner's share of income from any activity in Saudi Arabia less allowed expenses. The tax base for a nonresident carrying out its activities in Saudi Arabia through a permanent establishment is the income arising from the activities of the permanent establishment less allowed expenses.
Capital gains taxation: 20% capital gains tax is imposed on the disposal of shares in a residential company. However, as per the new tax regulations, the capital gains on disposal of shares on the Saudi stock exchange are exempt if the shares were acquired after 2004.
Main allowable deductions and tax credit: Bad debt, repairs, natural disasters, charitable donation, R&D expenses, etc.
Other corporate taxes: No other taxes like Capital duty, Payroll Tax, Real property tax, Stamp Tax, etc. is imposed on companies in Saudi Arabia.
However, Social Security (at 9% of the employee's salary) needs to be paid for Saudi employees. In addition accident insurance at 2% of salary needs to be paid for both Saudi and non-Saudi employees.

Individual taxes

Tax rate

Involved in production of oil and hydrocarbons

85%.

Allowable deductions and tax credit: Same as for companies. For details, visit: Department of Zakat and Income Tax.

Double taxation treaties

Countries with whom a double taxation treaty have been signed: See the tax treaties on the Income Tax website.
Whithholding taxes: Withholding tax rates are 5% for dividends, 5% for interest and 15% for royalties.

Sources of fiscal information

Tax Authorities: Department of Zakat and Income Tax
Other domestic resources: The Saudi Network
Arab Net
Expatriate Financial Guide to Saudi Arabia
IPR

Intellectual Property

National organizations: Industrial Property Office (Patents): Directorate of Patents at King Abdul-Aziz City of Science and Technology is deemed as the "Patent Office" in the Kingdom.

Industrial Property Office (Marks): Ministry of Commerce and Industry - Trade Mark Section

Copyright Office: Ministry of Information - General Administration of Copyright.
Regional organizations: Arab Society for Intellectual Property (ASIP)
Arab Intellectual Property Mediation and Arbitration Society (AIPMAS)
International membership: Member of the WIPO
Signatory to the Paris Convention for the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)

National regulation and international agreements

Type of property and law	Validity	International agreements signed
Patent Industrial Property Law -2004	15 years, can be extended for further 5 years.
Trademark The Law Of Trademarks (Royal Decree No. M/21, 7 August 2002)	Approximately nine years and eight months (ten Hegira years)	Nice agreement
Design Industrial Property Law -2004	10 years
Copyright Copyright Law (Royal Decree No. M/11, 30 Aug 2003)	Beetwen 25 and 50 years	Berne convention
Industrial Models Industrial Property Law -2004	10 years

Legal Framework

Independence of justice: No, the rule of law is regularly flouted by the Saudi regime, with frequent trials falling short of international standards - secret trials are common.
Equal treatment of nationals and foreigners: Foreign nationals cannot expect an impartial trial from the country’s judicial system. A considerable degree of corruption exits in the country, with foreign companies reporting that they often pay bribes to middlemen and government officials to secure business deals.
Foreign workers from Asia and Africa are subjected to discrimination and have difficulty using the justice system.
The language of justice: Arabic
Recourse to an interpreter: Having an interpreter is possible. In case of migrant workers, generally the respective consular officials of arrange for translation and interpretation.
Sources of the law and legal similarities: The main source of the law is Shari'a (the Islamic law) and the ‘ Quran ' is the constitution of the country. However the Basic Law that articulates the government's rights and responsibilities was promulgated by royal decree in 1992. Moreover several secular codes have been introduced and commercial disputes are handled by special committees. Saudi Arabia has not accepted compulsory ICJ jurisdiction.
Checking national laws online: The World Law Guide
The Library of Congress
The Middle East Information Network
Gulf-Law.com

Standards

National standards organizations: Saudi Arabian Standards Organization (SASO)
Integration in the international standards network: Saudi Arabia is a member of:

International Standard organization (ISO)

International Electrotechnical Commission (IEC)

International Telecommunication Union (ITU)
Classification of standards: The products covered in list of standards are classified as: toys, automotive, chemicals and electrical and electronics. Where no applicable Saudi standard exists, an acceptable international standard is approved by the SASO.
Online consultation of standards: Oum Al-Qura is the official gazette in which the regulations are published. For details, visit SASO website.
Certification organizations: Saudi Arabian Standards Organization (SASO)
The International Laboratory Accreditation Cooperation of which Saudi Arabia is an affiliate member.

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