A person subject to income tax in Saudi Arabia must file the tax return and pay the tax due within one hundred and twenty days from the end of the tax year, and may also be required to pay advance instalments on account of tax during that same year.
The Deadline for Filing the Tax Return
The tax return must be filed within one hundred and twenty days from the end of the tax year to which it relates. The taxpayer must also pay the tax due under its return within the same period, that is, one hundred and twenty days from the end of its tax year.
When Must a Chartered Accountant Certify the Return?
A taxpayer whose taxable income exceeds one million (1.000.000) Saudi Riyals must have a chartered accountant licensed to practise in the Kingdom certify the accuracy of the return before it is filed.
Advance Instalments on Account of Tax
A taxpayer that generates revenue in the tax year must pay three advance instalments on account of tax, on or before the last day of the sixth, ninth, and twelfth months of the tax year. Each instalment is computed by applying 25% to the difference between the taxpayer's tax for the preceding year under its return and the amount of tax paid through withholding at source during the preceding year.
The Relationship Between Advance Instalments and Withholding Tax
The instalment formula takes into account tax already withheld at source during the preceding year, deducting that withheld amount from that year's tax before applying the 25% rate to determine each advance instalment. This ensures the taxpayer does not bear a double burden on income from which tax has already been withheld at source.
When Are Advance Instalments Not Required?
A taxpayer is not required to pay advance instalments if the result of the instalment formula does not reach an amount of five hundred thousand (500.000) Riyals. Each instalment paid is treated as a payment on account of the taxpayer's total tax for the tax year to which it relates.
The Department's Power When No Return Is Filed
The Department has the right to correct and adjust the tax shown in the return so that it conforms to the Law, and it has the right to make a tax assessment if the taxpayer does not file its return. Failing to file the return within the statutory period therefore does not exempt the taxpayer from tax; rather, it allows the Department to estimate the tax base and assess tax on it.
Why Compliance with These Deadlines Matters for Businesses
Meeting the deadlines for filing and paying the tax return helps avoid penalties and late-filing procedures, while computing advance instalments in advance allows businesses to spread the tax burden across the tax year rather than bearing it all at once when the final return is filed. Knowing the threshold that requires certification by a licensed chartered accountant also helps larger businesses prepare early for review requirements before the filing deadline.
Legal References
- Income Tax Law, Article Sixty, Article Sixty-Nine, Article Seventy, and Article Sixty-Two.
For questions about your specific situation, you can ask the Saudi Arabia Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.