tax and zakat accounting

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Q1. A resident capital company has both Saudi and non-Saudi shareholders and its capital is divided between them equally. Net income for 2019 was 3,000,000 SR and was adjusted according to the tax rules applicable in the kingdom is 3,200,000 SR. (2 Marks)

Required:

  • Compute the tax amount to be paid by the company.
  • Compute the tax amount to be paid by non-Saudi shareholders assuming that dividends paid in cash of 1,000,000 SR.

Q2.Answer the following questions. (3 Marks)

1. A taxpayer realized capital gains of 50,000 SR from selling his shares in Saudi capital market. How does these gains are treated under the Saudi Law?

2. A taxpayer incurred expenses of 50,000 SR to improve a depreciable asset at a book value of 500,000 SR. What is the amount of expenses deductible by the tax law?

3. Resident Capital Company works in sales business has the following selected financial information:

Account

Amount

Allowance for doubtful account

80,000SR

Reserve for obsolete inventory

50,000SR

Bad debt (written off)

6,500SR

Donations to the Help the Poor Organization (non-licensed in Saudi)

11,350SR

Old employees’ reunion party expenses

15,000SR

Loss on disposal a delivery truck

8,000SR

How much of these accounts are deductible under Saudi Low? Explain your answer.