(Last updated: 27 March 2012)

Taxation

The Saudi income tax regulations are based upon a territorial concept and attempt to tax a foreign entity on profits. If the company is deemed to be a permanent establishment for tax purposes, it would then invite the impact and incidence of taxation.

Earnings outside the Kingdom are not subject to Saudi taxation. Direct sales by a foreign company to a customer in the Kingdom or sales to a distributor for resale in the Kingdom, is not considered doing business in the Kingdom and will not be subject to Saudi taxation. In addition, the foreign company can arrange transportation of the goods from the Saudi port to the project site without subjecting itself to Saudi taxation. However, if the foreign company installs the products, it will be subject to taxation.

Tax exemption for approved projects

Austrade works in conjunction with the Australian Taxation Office ('ATO') to administer the income tax exemption available under section 23AF of the Income Tax Assessment Act 1936 ('Tax Act').

Section 23AF should assist the international competitiveness of Australian companies and governmental organisations competing to win international tenders. Further information is available.

Top Business Risks

• Bribery of Foreign Officials
• Tariffs and regulations
• Doing business in Saudi Arabia

OECD Guidelines for Multinational Enterprises

Multinational Enterprises should be aware of the OECD Guidelines for Multinational Enterprises that provide voluntary principles and standards for responsible business behaviour in a variety of areas, consistent with applicable domestic laws. These Guidelines are endorsed and promoted by the Australian Government. For more information, go to the AusNCP website.