Article 16 of the KSA Income Tax Law outlines the tax treatment of Research and Development (R&D) expenses. It stipulates that R&D costs are deductible, provided they are directly connected with the generation of taxable income. However, the Article establishes a clear distinction for capital expenditures. The costs incurred for the purchase of land or equipment intended for research purposes are explicitly disallowed as a direct expense deduction. Instead, such equipment is subject to capitalisation and its cost is recovered through depreciation, which is governed by the provisions specified in Article 17 of this Law.