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REGULATIONS FOR COMPANIES: Formation and operation of business firms and companies is regulated by companies Law promulgated by Royal Decree No. M/6 dated 22 Rabi I 1385 H., (1965). Royal Decree No. M/5 dated 12 Safar 1387 H. (1967) and Royal Decree No. M/23 dated 28 Jumada II 1402 H. (1982) amended the regulations for companies. Under Article 1 of the Companies Law, a company has been defined as a contract pursuant to which each of two or more persons undertake to participate, in an enterprise aiming at profit, by offering in specie or as work a share, for sharing in the profits or losses resulting from such enterprise.
For details pertaining to formation and operation of companies, please contact Companies Department, Ministry of Commerce (see appendix I for address). THE TAX SYSTEM: The Kingdom of Saudi Arabia has a very liberal tax system; there are few taxes payable by an individual or a company and they are also at very low rates.
All legitimate business expenses and costs, including business losses and depreciation, are deductible in computing net profits. Any reasonable method of depreciation may be adopted by the company but the same must be adhered to from year to year. Capital gains are included in the profits of the company. The following tax rates, on a slab basis, are now in force:
Income tax is charged at different rates for companies engaged in the production of petroleum and hydrocarbons in the Kingdom. Every company is required to submit a financial statement on an official form and to pay the tax not later than the 15th day of the third month of the year following the Saudi Arabian fiscal year, which commences on the 10th of Capricorn (December 31). Companies formed under the provisions of the Foreign Capital Investments Regulations with participation of Saudi capital of not less than 25 percent are exempt for up to ten years from payment of income tax. For further details, please contact the Ministry of Finance and National Economy, Directorate of Zakat and Income, Companies Department, (see appendix I for address). TRADE MARKS REGULATIONS: The Trade Marks Regulations were originally issued by Royal Decree No. 8762 dated 28-7-1358 H. (1938). It contained 43 Articles. However, Articles 41, 42 and 43 were subsequently repealed by Royal Decree No. 8/M of 20 Rabi II, 1393 H. (1973). Thereafter these were reviewed and promulgated by Royal Decree No. M/5 dated 4-5-1404 H. (Jan. 7, 1984). Rules for Implementation of the Trade Marks Regulations were issued by the Minister of Commerce Resolution No. 94 dated 5.8.1404 H. (May 6, 1984). Provisions of the new Regulations included: definitions of trade marks, registration, announcement, renewal and deletion thereof in addition to the transfer of ownership of marks, mortgage, seizure, and licensing thereof together with definition of fees due on registration, etc. They define crimes and penalties regarding trade marks to protect public and private rights and formulation of procedural rules to decide on their crimes and impose penalties thereon.
These fees may be amended by a resolution of the Council of Ministers. For further details, please contact the Department of Internal Trade, Ministry of Commerce (see appendix I for address). PATENTS LAW: The Patents Law was promulgated by Royal Decree No. M/38 dated 10/6/1409 (January 17, 1989). The Law contains 62 articles with the main objective of providing adequate protection of inventions inside the Kingdom of Saudi Arabia. Applications for patents shall be submitted to the Directorate of Patents at King Abdul Aziz City for Science and Technology on the form designed for such purpose (see appendix I for address). The patent's term shall be fifteen years from date of grant and it may be extended for five more years. Patents' disputes shall be resolved by an ad hoc Committee at the King Abdul Aziz City for Science and Technology. Appeal against the Committee decision may be made to the Board of Grievances within sixty days from the date of notification. Patents fees as referred to in Article 59 of this law are as follows:
For further information, please contact the Patents Department, King Abdul Aziz City for Science and Technology (see appendix I for address). THE LAW FOR THE PROTECTION OF COPYRIGHTS The Copyright Protection Law, approved by the Council of Ministers Resolution No. 30 dated 2512/1410H., corresponding to September 25, 1989 was enacted by Royal Decree No. M/11 dated 19/5/1410H, corresponding to December 17, 1989, to take effect on 15/6/1410, corresponding to January 12, 1990. The Law's objective is to afford protection to authors of classified creative works in science, literature, and arts without regard to the type of classified work, its mode of expression, its significance or the purpose of composition. It contains definition of the following: classified work, author, publishing, creation, copying and national folklore and falls into the following seven chapters:
For further details, please contact the Ministry of Information (see appendix I for address). |
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