Article 13 of the KSA Income Tax Law specifies expenses that are explicitly non-deductible for tax purposes. These include any costs not directly connected with generating taxable income, such as personal consumption expenses for natural persons and recreation costs. Payments or benefits provided to shareholders, partners, or their relatives, like salaries or wages, are also disallowed if they do not meet arm's-length transaction standards. Furthermore, income tax paid within the Kingdom or in other countries cannot be deducted. The article disallows fines and penalties, except for those arising from breaching contractual terms, and prohibits the deduction of bribes or similar payments.
Chapter 5 - Expenses of Earning Income
Article 13 - Non-deductible Expenses
No deduction is allowed for the following:
Expenses not connected with the earning of taxable income.
Any amounts paid or benefits offered to a shareholder, partner, or any of their relatives which constitute salaries, wages, awards, or the like, or those which do not satisfy the conditions for transactions among independent parties against properties or services.
Recreation expenses.
Expenses of a natural person for personal consumption.
Income tax paid in the Kingdom or in another country.
Fines and financial penalties paid or payable to any party in the Kingdom, excluding those paid for breach of contractual conditions and obligations.
Any bribe or similar amounts which are considered a criminal offense under the laws of the Kingdom, even if paid abroad.
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