Income Tax in Saudia Arabia
Jan 22nd 2014, 3:35 pm
#1
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Joined: Jan 2014
Posts: 2
Income Tax in Saudia Arabia
Hi...
There is a possibility that my business partner and myself will get a 6 month contract providing IT consultancy in Saudi Arabia. I was wondering how this worked with tax. I understand from our company accountant that we will be liable to normal corporation tax and income tax in the UK, however they were unable to advise on whether we would be additionally considered resident in Saudi Arabia and if we were, whether there were any tax liabilities either for the company or personally.
The contract is 6 months, but could be extended to 8 months. We would be in Saudi Arabia full time, but would be allowed 2 days a month off (to tag on to a weekend) to return home briefly. It is also likely that, given the rules around alcohol, we would travel elsewhere for one of the other weekends each month, but unlikely that would be all the way back to the UK. What are the rules in Saudi Arabia around residency? If we are considered resident there, is there any registration we need to do, or is the visa sufficient? Would we be liable to pay any personal or company tax out there? (the company remains a limited company in the UK, we are employed by it and our salaries/dividends would be paid from the company into our UK personal bank accounts - we would however need to withdraw some of that in Saudi Arabia to cover living expenses etc...)
Im struggling to find details on this, short of contacting an accountant in Saudi Arabia, so any help would be greatly appreciated.
Many thanks in advance, for any help
There is a possibility that my business partner and myself will get a 6 month contract providing IT consultancy in Saudi Arabia. I was wondering how this worked with tax. I understand from our company accountant that we will be liable to normal corporation tax and income tax in the UK, however they were unable to advise on whether we would be additionally considered resident in Saudi Arabia and if we were, whether there were any tax liabilities either for the company or personally.
The contract is 6 months, but could be extended to 8 months. We would be in Saudi Arabia full time, but would be allowed 2 days a month off (to tag on to a weekend) to return home briefly. It is also likely that, given the rules around alcohol, we would travel elsewhere for one of the other weekends each month, but unlikely that would be all the way back to the UK. What are the rules in Saudi Arabia around residency? If we are considered resident there, is there any registration we need to do, or is the visa sufficient? Would we be liable to pay any personal or company tax out there? (the company remains a limited company in the UK, we are employed by it and our salaries/dividends would be paid from the company into our UK personal bank accounts - we would however need to withdraw some of that in Saudi Arabia to cover living expenses etc...)
Im struggling to find details on this, short of contacting an accountant in Saudi Arabia, so any help would be greatly appreciated.
Many thanks in advance, for any help
Jan 23rd 2014, 7:55 pm
#2
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Joined: May 2013
Posts: 278
Re: Income Tax in Saudia Arabia
What kind of visa do you have? Will you get an iqama (residence permit)?
Regarding Saudi tax, there shouldn't be any tax implications for either you or your company. Saudi has no personal tax (except a voluntary contribution called zakat which Muslims should pay). There is tax on companies paying dividends but it shouldn't apply to a UK company operating here.
Regarding UK tax, as you are outside the UK for only six months you will be liable for full UK tax on all your earnings anywhere in the world (and so will your company, obviously).
The only way to escape UK tax as an individual is to either (i) break ties with the UK completely for a long period or (ii) sign a work contract full time overseas which covers an entire UK tax year (i.e. April 2014 - April 2015).
You can probably claim tax exemptions on relocation expenses and overseas living expenses.
Anyway you should speak to an accountant (NB I am not an accountant), especially if there are significant sums involved.
Regarding Saudi tax, there shouldn't be any tax implications for either you or your company. Saudi has no personal tax (except a voluntary contribution called zakat which Muslims should pay). There is tax on companies paying dividends but it shouldn't apply to a UK company operating here.
Regarding UK tax, as you are outside the UK for only six months you will be liable for full UK tax on all your earnings anywhere in the world (and so will your company, obviously).
The only way to escape UK tax as an individual is to either (i) break ties with the UK completely for a long period or (ii) sign a work contract full time overseas which covers an entire UK tax year (i.e. April 2014 - April 2015).
You can probably claim tax exemptions on relocation expenses and overseas living expenses.
Anyway you should speak to an accountant (NB I am not an accountant), especially if there are significant sums involved.
Last edited by FriendlyExpat; Jan 23rd 2014 at 8:24 pm.
Jan 25th 2014, 1:15 pm
#3
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Re: Income Tax in Saudia Arabia
Hi Friendly Expat,
Thanks for your advice.
I dont know the visa type yet, we are just bidding for the work at the moment (albeit in an advanced stage), so I guess that will come from the client if and when we win it. Im not worried about escaping UK tax, I would expect to pay that, as you say, Im not going to be away enough to be exempt from that. I had read however that there was a Personal Income Tax in Saudi for non residents and had assumed that I would be subject to that given that I would be in Saudi, but being paid into an account in the country I was officially resident in (ie the UK). I was worried that I would be double taxed.
Do you know of any accountants that you can recommend that might be able to confirm? Our accountants (and their advisers) don't know any details about taxation in Saudi and I don't know else to ask....
thanks again for your response
cheers
southampton1234
Thanks for your advice.
I dont know the visa type yet, we are just bidding for the work at the moment (albeit in an advanced stage), so I guess that will come from the client if and when we win it. Im not worried about escaping UK tax, I would expect to pay that, as you say, Im not going to be away enough to be exempt from that. I had read however that there was a Personal Income Tax in Saudi for non residents and had assumed that I would be subject to that given that I would be in Saudi, but being paid into an account in the country I was officially resident in (ie the UK). I was worried that I would be double taxed.
Do you know of any accountants that you can recommend that might be able to confirm? Our accountants (and their advisers) don't know any details about taxation in Saudi and I don't know else to ask....
thanks again for your response
cheers
southampton1234
Jan 25th 2014, 3:57 pm
#4
Just Joined
Joined: Jan 2014
Posts: 1
Re: Income Tax in Saudia Arabia
Hi Southampton
By way of introduction, I work for tax department in one of the big 4 accounting firm in Riyadh. If your company is interested to have complete information on tax consequences arising from their proposed contract in Saudi Arabia. We can help you in it.
Regards.
By way of introduction, I work for tax department in one of the big 4 accounting firm in Riyadh. If your company is interested to have complete information on tax consequences arising from their proposed contract in Saudi Arabia. We can help you in it.
Regards.
Jan 25th 2014, 4:20 pm
#5
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Joined: May 2011
Location: Jeddah
Posts: 259
Re: Income Tax in Saudia Arabia
Non-residents can't work in Saudi and can't get any income so there is no any Income Tax.
Jan 25th 2014, 6:38 pm
#6
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Joined: Jan 2014
Location: London
Posts: 1
Re: Income Tax in Saudia Arabia
What kind of visa do you have? Will you get an iqama (residence permit)?
Regarding Saudi tax, there shouldn't be any tax implications for either you or your company. Saudi has no personal tax (except a voluntary contribution called zakat which Muslims should pay). There is tax on companies paying dividends but it shouldn't apply to a UK company operating here.
Regarding UK tax, as you are outside the UK for only six months you will be liable for full UK tax on all your earnings anywhere in the world (and so will your company, obviously).
The only way to escape UK tax as an individual is to either (i) break ties with the UK completely for a long period or (ii) sign a work contract full time overseas which covers an entire UK tax year (i.e. April 2014 - April 2015).
You can probably claim tax exemptions on relocation expenses and overseas living expenses.
Anyway you should speak to an accountant (NB I am not an accountant), especially if there are significant sums involved.
Regarding Saudi tax, there shouldn't be any tax implications for either you or your company. Saudi has no personal tax (except a voluntary contribution called zakat which Muslims should pay). There is tax on companies paying dividends but it shouldn't apply to a UK company operating here.
Regarding UK tax, as you are outside the UK for only six months you will be liable for full UK tax on all your earnings anywhere in the world (and so will your company, obviously).
The only way to escape UK tax as an individual is to either (i) break ties with the UK completely for a long period or (ii) sign a work contract full time overseas which covers an entire UK tax year (i.e. April 2014 - April 2015).
You can probably claim tax exemptions on relocation expenses and overseas living expenses.
Anyway you should speak to an accountant (NB I am not an accountant), especially if there are significant sums involved.
I spoke to a lady from HMRC this afternoon. I am in a similar position, working in Riyadh for 12 months. The UK tax year runs from 6/4/14 to 5/4/15.
You will be liable to pay UK personal tax or corporation tax unless you work overseas for the full UK tax year.
hope this helps?
