Tax Base of Non-resident Insurance Company in Saudi Arabia

Tax Base of Non-resident Insurance Company in Saudi Arabia on their its taxable income from any activity from sources within the Kingdom of Saudi Arabia minus expenses permitted under this Law.

The tax base of a non-resident insurance company that is engaged in general insurance business in the Kingdom through a permanent establishment is determined as follows:

Gross income consists of the following:

Gross premiums received or receivable from contracts for insurance risks in the Kingdom, less any premiums returned (cancelled) and less any premiums paid for reinsurance.
Reserve for unearned premiums and unexpired risks formed at the end of the previous fiscal year as allowed under Article 9 (5/b) of these Regulations.
Investment income attributable to contracts for insurance risks in the Kingdom, and it is determined as follows: The proportion of worldwide investment income, which the total local premiums bear to the total worldwide premiums.
Any other income attributable to the permanent establishment.

Total expenses are as follows:

Payments paid under property and risks insurance policies in the Kingdom, less any such amounts that were covered by re-insurance.
A reserve for unearned and for unexpired risks formed at the end of the current fiscal year.
Allowed expenses incurred by the permanent establishment in the Kingdom.
A subsidiary’s share in the general administrative expenses of the head-office of the company determined as follows: The proportion of the Gross Head-Office general and administrative expenses, which the total local premiums bear to the total worldwide premiums.

The tax-base of the insurance company should not be less than the proportion of worldwide pre-tax net income from general insurance, which the income from local premiums bears to income from worldwide premiums (in accordance with consolidated worldwide financial statements).

The tax base of an insurance company that is engaged in life (saving) insurance in the Kingdom is determined as follows:

Resident insurance company: Income from investment, minus administrative expenses related to investment income.
Nonresident insurance company that carries out its activities through a permanent establishment in the Kingdom: The proportion of worldwide gross income from investment, which the total local premiums bear to total worldwide premiums,

Minus:

the subsidiary’s share in worldwide management expenses related to investment income which is the proportion of worldwide management expenses related to investment, which the total local premiums bear to total worldwide premiums;
a proportion of head-office general and administrative expenses according to the following formula: the proportion of total head-office administrative and general expenses, which the total local premiums bear to total worldwide premiums.

The term “life insurance” means issuance of insurance policies whose proceeds become due at the end of the contract or upon death of the insured person.

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