Referring to the Investment Law and the cabinet decree alleviating foreign investors' tax burden, Minister of Finance and National Economy Dr. Ibrahim Al-Assaf announced in a press release today that a new regulation is currently under consideration by the Supreme Economic Council, capping the tax rate at 30 percent of the net profits of foreign companies and foreign partners in joint ventures. This move, he said, is consistent with efforts to make the system more competitive, and follows the revocation in the new Investment Law of the ten-year and five-year tax exemptions. He explained that the government is assuming liability for 15 percentage points of net profits above SR 100,000 as a transitional measure, which will in effect limit the tax burden to a maximum of 30 percent of net profits as compared with the current rates. These are 25 percent up to SR 100,000; 35 percent from SR 100,000 to SR 500,000; 40 percent from SR 500,000 to SR 1 million; and 45 percent over SR 1 million. In addition, he said, losses will be permitted to be carried over for an indefinite period of time, instead of being limited to one year.
Dr. Al-Assaf further explained that the provisions of this decree, which took effect on April 10, 2000, will apply to all foreign taxpayers in Saudi Arabia. Current investors who enjoy tax exemptions granted under the old investment law will, however, continue to do so until such exemptions expire.