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Capital Gains Tax

The capital gains tax is basically considered part of the income tax, and in simple terms it is a tax imposed on the profits of the non-resident partner resulting from the sale of subject capital assets in the Kingdom. The capital gains tax can also be imposed as a result of mergers and corporate restructuring If it results in a tax reality.

The definition of an asset, according to the income tax system, can be money, shares, stocks, securities, and other tangible and intangible assets.

To clarify, we give a simple example: an Emirati partner who is not resident in Saudi Arabia owns a share in a limited liability company residing in Saudi Arabia, and decides to sell his share to a Saudi partner. A 20% tax will be imposed on his capital gains realized from the sale “according to the calculation method mentioned in the law.”

As an exception to the above, capital gains realized from selling a share in a company traded in the Saudi financial market are exempt.

Finally, it should be noted that the buyer is jointly responsible with the selling partner in paying any tax dues to the Authority based on the regulation.

Sources :

The income tax law issued by Royal Decree No. (M/1) dated 1/15/1425 AH

The executive regulations for income tax issued by Ministerial Resolution No. (1535) dated 6/11/1425 AH

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