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.