Abdulaziz Al-Sowailim

Tax Time – Insights into the Saudi Tax Scene #1 As part of my commitment to sharing insights into the Saudi tax environment, I am pleased to kick off a series of weekly updates. Recently, I had the privilege of participating in a panel discussion at the Jersey Finance event in Jeddah, where we examined significant tax and zakat developments impacting family business structures in the Kingdom. The following is a synopsis of the key points raised: A proposed tax law, expected to be finalized in 2024, introduces several considerations for family businesses, including a refined concept of 'place of effective management' and its tax repercussions for offshore entities, a 'look-through' approach for certain funds and partnerships, capital gains tax implications upon divestment, the treatment of transactions with preferential tax jurisdictions, reduced withholding tax rates, and risks associated with mergers, domiciliation, and; interestingly for 'natural persons' a potential personal income tax. Revised zakat regulations, effective from this year, offer a precise computation of the zakat base, minimum zakat obligations, specific guidelines for funds, and, notably, exemptions for philanthropic organizations, charities, non-profits, waqfs, and endowments under certain conditions. With the enforcement of transfer pricing regulations, family businesses must now scrutinize group and related party arrangements more closely. This includes evaluating interest-free loans, group services, and family office support for entities both within and outside the Kingdom, ensuring compliance with the 'arm's length' principle for goods and services. Amendments to the real estate transaction tax law provide relief for in-kind contributions to entities and funds, facilitating strategic planning for real estate assets. Family groups with international structures must consider the BEPS Pillar 2 initiative, which mandates a global minimum tax of 15%. This is particularly relevant for investments in low-tax jurisdictions. The introduction of tax in the UAE and the use of special purpose entities in jurisdictions like ADGM or DIFC requires careful consideration to meet economic substance requirements. This is also applicable to family groups with arrangements in other jurisdictions traditionally utilized for legal, tax, and family succession planning. The conversation will continue next week with a focus on tax issues relevant to venture capital and private equity in Saudi Arabia. The insights shared herein are personal and do not represent the views of my employer. They are intended for general informational purposes and should not be construed as professional tax advice. #sauditax #familybusiness #zakat #transferpricing #internationaltax #corporatetax #bepspillar2 #taxplanning #saudiarabia #uae

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Now is the time to start understanding the concept and requirements of ESG to prepare for complying with the upcoming compliance. Stay connected with us and we will keep you posted!

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As per the recent 2024 International accounting Bulletin "IAB" report for KSA, We are glad to say that Allinial Global are ranked 1st among other associations in the Kingdom. link: https://lnkd.in/dzANSbns

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#KPMG #KPMGSaudi #digitaltransformation #dataprivacy #technologyrisk #impactoninternalaudit #saudiarabia #vision2030 Technology risk and its impact on internal audit - Evolution of the practice in Saudi Arabia This paper will explore the impact of technology on internal audit practices and the emerging challenges and disruptive opportunities they bring for the internal audit function in both the near future and the long run. By embracing technology and continuously developing their skillsets, internal auditors can ensure they remain relevant and provide valuable insights to their organizations. KPMG Saudi Arabia Khalid A. Mazen Hamad, CPA Shadi Abuserryeh 🇵🇸 Karim E. Peter Bannink

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Tax Time – Insights into the Saudi Tax Scene In the ever-evolving landscape of Saudi taxation, staying informed is crucial for businesses and professionals. By keeping up-to-date with these changes, companies can navigate the complexities of the tax system and position themselves for success in the dynamic Saudi market. Stay tuned as I embark on a journey to explore these through a series of weekly updates. I’ll also share practical steps that businesses can take to adapt to these tax and related laws. Disclaimer: The information provided will be shared on a personal basis and does not reflect the views of my employer. It is intended to offer general guidance only and should not be considered professional tax advice. Stay tuned. #Sauditax #TaxInsights #Internationaltax #TaxStrategy #TaxUpdates

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Saudi Arabia and the challenges of BEPS Pillar Two adoption In 2021, the Organisation for Economic Cooperation and Development (OECD) Inclusive Framework (IF) issued a ‘Statement’ focused on addressing the key challenges of base erosion and profit shifting (BEPS) arising from the digitalisation of the global economy. The Statement proposed a Two-Pillar Solution, comprised of (i) Pillar One which aims to ensure a fairer distribution of taxing rights is established with respect to the profits of large multinational enterprises (MNEs), and (ii) Pillar Two which implements a new global minimum Effective Tax Rate (ETR) of 15% for certain MNEs. Pillar One provides for MNEs to be subject to tax in countries where they sell their products or services (often referred to as market countries). Amount A of Pillar One would apply to MNEs with more than €20 billion in consolidated group revenues and an overall profit margin above 10%. It is envisaged that 25% of the profits above a 10% margin may be taxed in the market economies. Pillar Two introduces a global minimum tax system. The threshold for this system to apply is lower than for Pillar One, namely consolidated group revenues of more than €750 million in line with the threshold for country-by-country (CbC) reporting. While Pillar One rules continue to evolve, the rules and guidance related to Pillar Two adoption have been issued and expected to take effect in 2024. For now, it may be useful to understand the mechanism for collection of additional taxes. It is envisaged that this will work via a series of rules which somehow ensure that taxpayers pay a minimum rate of tax of 15% on their global income, no matter the jurisdiction in which the income is earned. If the effective tax rate for a jurisdiction is below the 15% minimum rate, a top-up tax may be imposed and collected under one of the three following interlocking rules aimed at reducing profit shifting and base erosion: - Income inclusion rule (IIR): Imposes a top-up tax at the parent-entity level that effectively allows countries to "top up" the tax on earnings of foreign subsidiaries with effective tax rates below 15%. - Qualified domestic minimum top-up tax (QDMTT): Is a domestic "top-up" tax that will take precedence over either an IIR or UTPR and tax domestic entities up to 15% before another country's UTPR or IIR applies. - Undertaxed profit rule (UTPR): Will generally deny deductions with respect to members of a group or otherwise impose mechanisms that will impose additional tax on income subject to an effective tax rate below 15% that is not otherwise subject to an IIR or QDMTT. Saudi Arabia as a member of the IF is expected to adopt Pillar Two rules. The implementation of Pillar Two has the potential to notably raise the effective tax rate for Saudi Arabia MNEs that meet the criteria for Pillar Two adoption. #beps #pillar2 #internationaltax #saudiarabia #zakat #oecd

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Day two of the conference begins with very relevant topic. All audit firms are required to adhere to ISQM 1 standards to maintain high quality, achieve audit objectives and meet stakeholders expectations. #isqm1 #mgimena #mgiworld #auditingstandards #omanauditors #fsaoman #cmaoman

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In my latest opinion piece with the Oxford Business Group, I attempt to cover the changing #taxlandscape in the GCC region, the rapid technological changes, and how KPMG in Kuwait invests in #ESG for a better tomorrow. Thank you to the team at Oxford Business Group for publishing my opinions on these critical matters that are changing the #businesslandscape across the GCC region. https://lnkd.in/d_nGnMmP

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Tax Times– Insights into the Saudi Tax Scene #2– Venture capital and private equity tax concerns As Saudi Arabia strides towards its Vision 2030, the venture capital and private equity sector emerges as a pivotal force in economic growth. Understanding the tax landscape is crucial for investors and fund managers in this dynamic market. Investors, particularly Saudis and GCC nationals, face a 2.5% zakat on investments and income from share sales. If investments route through offshore entities, a 5% withholding tax on dividends and a 20% capital gains tax on share sales apply. Key considerations for stakeholders include creating a tax framework conducive to lucrative exits, aligning corporate and tax regulations with global standards, and ensuring predictable tax outcomes for IPOs. This alignment is essential for financing emerging companies and aligning venture capital exits. Other specific KSA considerations include zakat obligations, VAT and RETT implications for real estate funds, and the tax treatment of various income streams like share of income, carried interest, consulting, management and performance fees. Recent zakat regulations and the draft of the new tax law, pending publication, aim to address these issues. The proposed law covers rules for funds, foreign partnerships, redomiciliation, hybrid instruments, mergers, and tax relief, signaling a move towards a more investor-friendly tax regime. These reforms reflect KSA's proactive stance in refining its fiscal environment to bolster venture capital and private equity investments, potentially leading to increased capital inflows and diversified economic growth. What are your thoughts on these developments? Next week, we will continue the conversation with a focus on tax considerations for non-resident contractors engaged in construction and large-scale projects in Saudi Arabia.   Disclaimer: The insights shared herein are personal and do not represent the views of my employer. They are intended for general informational purposes and should not be construed as professional tax advice. #venturecapital #privateequity #saudiarabia #taxation #economicgrowth #Vision2030 #zakat #transferpricing #internationaltax #corporatetax #pillar2 #taxplanning #saudiarabia #withholdingtax #taxplanning #fundmanagers

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@PwC’s ‘In brief’ highlights some key treasury topics from IFRS 18 for corporate entities, such as classification of foreign exchange differences, derivatives gains and losses and income and expenses on other financial instruments. 📖Read it here https://pwc.to/3y4D5gC #IFRS18 #Viewpoint

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“Building a Better Future for Saudi Arabia”🇸🇦! It was interesting to present our Control and Internal Audit course campaign, which revolves around governance and under the slogan of the 93rd Saudi National Day “We Dream and Achieve” to highlight the role of governance in achieving the aspirations of the Kingdom of Saudi Arabia, aligning with Vision 2030. #Governance #InternalAudit #Vision2030

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As #Oman marks the three-year milestone since the introduction of Value Added Tax (#VAT), it's essential to acknowledge the strides made in adaptation and progress. Our upcoming webinar provides an insightful exploration of this journey, equipping businesses with practical insights to navigate compliance challenges, streamline operations, and leverage VAT for strategic growth. Reserve your seat now to access expert advice and tangible strategies for thriving in Oman's VAT environment. Register here: https://shorturl.at/uFJ18

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The latest issue of ‘Beyond the GAAP’ looks into the changes and clarifications introduced by the amendments to IFRS 9 and IFRS 7 published by the IASB in May 2024. Read more here: https://lnkd.in/d8CgRXDS #IFRS #IASB

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#EY #GCRS #IFRS the latest edition of IFRS Update- Standards and interpretations in issue 30 June 2024. this publication provides a helpful snapshot of the recent standard setting activities at the IASB and IFRS Internationals Committee and companies can find out more about the new standards and amendments which will be effective in future periods. Click below to read or download.

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It was a pleasure to join EY colleagues in Dubai at the meeting of our global Government and Public Sector Leadership team. I am continually inspired by the profound impact of EY's public sector work around the world. Our work with the Governments is diverse. We are shaping and delivering AI, Trade, Investments, Defence, Economic, Taxation, Welfare, Infrastructure outcomes amongst others. We're supporting national education strategies and helping institutions harness latest technology to enhance learning experiences and outcomes for the next generation. We're helping healthcare systems improve patient care to make quality care accessible to all. And we're preparing workforces for tomorrow's industries, advising governments on the critical skills needed to thrive in an ever-evolving global economy. The stories shared by colleagues today spanned the globe, but all featured a common thread: when public and private sectors unite as partners in progress, the results make a transformative, meaningful difference to the lives of citizens. #BetterWorkingWorld #EYImpact #PublicSectorInnovation #GlobalEducation #HealthcareTransformation #WorkforceDevelopment #GovernmentAdvisory #GlobalEconomy #EY Kristin Valente Andreas Sanz Jad Shimaly Raj Sharma Jeremy Masters Catherine Friday Meghan Mills Arnauld Bertrand Andrew Phillips Amanda Evans Tracey Saunders Kirsten Tisdale Cornelia Gottbehüt Gaurav Taneja Firas Qoussous Amar Shankar Permenthri Pillay Craig Glindemann Fran Exley Stig Thorgersen Jonas Groes Julie Teigland Hanne Jesca Bax Doree Keating Linda Andersson

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IFRS 19 Subsidiaries without Public Accountability: Disclosures was published on 9 May 2024. IFRS 19 permits certain entities to apply the full measurement requirements of IFRS Accounting Standards, but with significantly reduced disclosures. BDO's IFR Bulletin includes everything you need to know about IFRS 19, including the criteria that an entity must meet to apply the standard, the effective date and more.

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IFRS 19 Subsidiaries without Public Accountability: Disclosures was published on 9 May 2024. IFRS 19 permits certain entities to apply the full measurement requirements of IFRS Accounting Standards, but with significantly reduced disclosures. BDO's IFR Bulletin includes everything you need to know about IFRS 19, including the criteria that an entity must meet to apply the standard, the effective date and more.

I am delighted to share that our webinar, "AI-Powered Chartered Accountants: Enhancing Efficiency & Innovation," organized by AI in ICAI, was a resounding success. We extend our heartfelt thanks to the ICAI President, Vice President, Vice Chairman, and all GCC participants for their invaluable support and active engagement. Watch: https://lnkd.in/g4ZrPJFu #AIinICAI

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PwC's ‘In brief’ highlights some key treasury topics from IFRS 18 for corporate entities, such as classification of foreign exchange differences, derivatives gains and losses and income and expenses on other financial instruments. 📖Read it here. #IFRS18 #Viewpoint

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