Tax Administration by GAZT in Saudi Arabia

Tax Administration by GAZT in Saudi Arabia – Regulatory Authority in Saudi Arabia: The Department is the body responsible for the administration, examination, assessment and collection of income tax.

Except the taxpayers subject to final withholding tax, the following are required to register with the Department for tax purposes:

a) Every person subject to tax under the Law is required to register with the Department before the end of its first fiscal year.

b) Every person or agency, required to withhold tax, including partnerships, must register with the Department before payment of the first payment.

c) The Department shall register governmental and public agencies and organizations.

d) Failure to register within the legally prescribed period will impose the following penalties:

Category	Failure to register (Amount is Saudi Riyal)
Natural person	1,000
Stock capital company	10,000
Other entities	5,000

Recordkeeping by Tax Administration Authority

Other than a non-resident with no permanent establishment in the Kingdom, a taxpayer must keep in the Kingdom and in Arabic the commercial books and records: at minimum, the general journal, ledger, inventory book and other accounting records as it may be necessary to accurately determine tax liability. A taxpayer is also required to keep supporting documents and explanatory data and remarks.

A taxpayer may employ a professional and specialized entity to comply with this requirement but the taxpayer remains directly responsible for such compliance and must as well comply with Commercial Books Regulations.

A taxpayer may keep books and records by computer if met specific requirements.

A taxpayer may keep books and records by computer under the following conditions:

a) The computer has to be in the Kingdom. A taxpayer who has business in the Kingdom through a permanent establishment may have its central computer abroad with a terminal at the subsidiary in the Kingdom through which all data and entries regarding the subsidiary’s operation can be obtained.

b) Data entered into computer regarding the required records should be in Arabic and should give a position identical to that of the required books.

c) Original supporting documents for all entries in accounting books and records should be kept in the Kingdom.

d) Final accounts and balance sheet shall be generated directly by computer. In case of using a traditional method (physical books and records) with computer assistance, all reconciliation entries should be attached and in Arabic.

e) Periodical (quarterly) computer print outs inclusive of all data should be generated.

f) The establishment shall have documentation of computer information entry and processing (accounting entries) for reference, if needed.

g) The establishment should have adequate security measures and controls that can be reviewed and examined to prevent manipulation of data and information.

h) The Department has the right to review by computers the systems and programs used by a taxpayer to prepare its computerized accounts.

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