A company is considered a resident company if it is formed under the Saudi Arabian Regulations for Companies or if its central management is located in Saudi Arabia.
Permanent establishment (PE)
According to the Saudi tax regulations, the following are the requirements for considering a non-resident party to have a PE:
- A PE of a non-resident in Saudi Arabia, unless otherwise provided below, consists of the permanent place of activity of the non-resident through which one carries out business, in full or in part, including business carried out through an agent.
- The following are considered a PE:
- Construction sites, assembly facilities, and the exercise of related supervisory activities.
- Installations or sites used for surveying for natural resources, drilling equipment, or ships used for surveying for natural resources, and the exercise of related supervisory activities.
- A fixed location where a non-resident natural person carries out business.
- A branch of a non-resident company that is licensed to carry out business in Saudi Arabia.
- A place is not considered a PE of a non-resident in Saudi Arabia if it is used in Saudi Arabia only to do the following:
- Store, display, or deliver goods or products belonging to the non-resident.
- Keep an inventory of goods or products belonging to the non-resident only for the purposes of processing by another person.
- Purchase goods or products only for the collection of information for the non-resident.
- Perform any other activities that are preparatory or auxiliary in nature for the interests of the non-resident.
- Prepare contracts relating to loans, supply of products, or perform technical services for signature.
- Execute any group of the activities mentioned above.
- A non-resident partner in a resident personal company is considered an owner to a PE in Saudi Arabia in the form of a share in a personal company.
Furthermore, the agent mentioned in the above article is identified as a dependent agent who has any of the following authorities:
- Negotiate on behalf of a non-resident.
- Conclude contracts on behalf of a non-resident.
- Has a stock of goods, owned by a non-resident, on hand in Saudi Arabia to supply the clients’ demands regularly on behalf of the non-resident.
A place from which a non-resident carries out insurance and/or reinsurance activity in Saudi Arabia through an agent is considered a PE of the non-resident even though the agent is not authorised to negotiate and conclude contracts on behalf of the non-resident.