Article 18 of the KSA Income Tax Law outlines the rules for deducting expenses related to the repair or improvement of depreciable assets. As per paragraph (a), taxpayers are permitted to deduct these costs. However, paragraph (b) establishes a significant limitation: the deductible amount in any given year cannot exceed 4% of the asset group's value balance at the end of that year. Any expenditure surpassing this 4% threshold, as specified in paragraph (c), is not deductible in the current year but must be added to the balance of the asset group's value, effectively being capitalised.
Chapter 5 - Expenses of Earning Income
Article 18 - Expenses of Asset Repair and Improvement
Expenses incurred by the taxpayer for the repair or improvement of depreciable assets in each group may be deducted.
The amount of expenses deductible in accordance with paragraph (a) of this Article for each year shall not exceed 4% of the balance of the value of the group at the end of said year.
The amount exceeding the limit stated in paragraph (b) of this Article shall be added to the balance of the value of the group.
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