Tax and Zakat Accounting (ACCT 422)

Q1. Depreciation rates used in financial accounting shall not be used in tax accounting whereas tax law gives tax credits to tax payers by using accelerated depreciation rates for some groups of assets

Q2. The paragraph (e) in the article 17 of the Saudi income tax explained how depreciation expense is calculated for any group of assets.

Give a numerical example explaining the applicability of the paragraph (e) in the article 17 of the Saudi income tax.

Q3. Resident Bank fully owned by Sweden investors has the following selected items drawn from its accounting books (Amounts in Saudi Riyal)

Account

Amount

Deductible

Non-deductible

Allowance For Loan Losses

840,000

Employees’ share in retirement fund.

190,000

Bad debt (written off)

18,340

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

11,350

Depreciation for New computers purchased to be used on research and development

35,100

Old employees’ reunion party expenses

3,000

Bank’ share in retirement fund within the limit in the law.

145,000

Loss on denoted assets

8,000

Income tax paid to tax and zakat authority

150,000

Sample Solution

ACED ESSAYS