King Salman orders applying tax rate to downstream operations for 5 years starting Jan 2020
Saudi Arabia's King Salman has issued a royal decree on starting to apply the tax rate stipulated in Article 7/B of the income tax law to downstream operations of oil and hydrocarbon producers across the Kingdom for 5 years, starting from Jan. 1, 2020.
Based on the amendment to Article 7/B of the income tax law, the tax rate for persons operating in the natural gas investment field stands at 20 percent, Argaam earlier reported.
Under the royal decree, if taxable oil and hydrocarbon producers fail to separate downstream activities from oil and hydrocarbon production operations in five years starting Jan. 1, 2020, a tax will be collected pursuant to Article 7/C of the income tax law as follows:
- A 50 percent tax on taxable persons with capital investments of over SAR 375 billion in the Kingdom.
- A 65 percent tax on taxable persons with capital investments between SAR 300 billion and SAR 375 billion in the Kingdom.
- A 75 percent tax on taxable persons with capital investments between SAR 225 billion and SAR 300 billion in the Kingdom.
- A 85 percent tax on taxable persons with capital investments of SAR 225 billion in the Kingdom.
Total capital investment is the aggregate accumulated value of fixed assets from property, plant and equipment, other equipment and intangible assets including prospecting and exploration costs of oil and hydrocarbons and their development before depreciation and amortization.