KSA's Tax Authority published Proposed Amendments to income tax laws

The Zakat, Tax, and Customs Authority (ZATCA) recently published a public consultation document proposing changes to the Income Tax Law, inviting public input until October 25, 2023. The proposed amendments outlined in the document are as follows:

1. Additions to Article 68 of the Income Tax Law regarding Withholding Tax Exemptions:

• Salaries and similar benefits paid by employers to employees or individuals under an employee-employer relationship.

• Bonus payments to board members or similar positions categorized as wages.

• Payments to non-resident "transparent entities," specifically for the portion of income attributable to Saudi Arabian residents.

2. Revisions to Withholding Tax in Relation to Article 68 (a) of the Income Tax Law:

• Exemption from Withholding Tax on dividends paid by listed companies to non-resident shareholders or funds outside Saudi Arabia, including the issuance of bonus shares

• Introduction of a 10% Withholding Tax on payments for services to non-residents.

• Implementation of a 5% Withholding Tax on payments for loan fees to related parties.

Amendments to Withholding Tax rates table in Article 68 (a) of the Income Tax Law:

The following items would be removed from Tax rates Table:

Management Fees                                                                                                   20%

Payments for airline tickets, air or maritime freight                                            5%

Payments for international telecommunication services                                   5%

Any other payment specified in the regulations                                                 15%

provided that the tax rates do not exceed

Changes to Article 16 of the Income Tax Law where the Income Tax By laws would govern the treatment of expenses that are relating to research, innovation, and development.