Tax depreciation
In one sentenceThe depreciation of fixed assets accepted under the income tax law, at rates and in groups set by the Implementing Regulations; it may differ from the depreciation recorded in the books.
Simply put
In the books you choose the depreciation method and the asset's life according to the standards, but for tax purposes you follow the Regulations' rates for each asset group.
The difference between them is adjusted when calculating the base: if accounting depreciation is higher, the difference is added back to profit, and if it is lower, it is deducted.
Worked example
A factory recorded accounting depreciation of 80,000 SAR, while the depreciation allowed for tax at the Regulations' rates is 60,000 SAR.
Accounting depreciation80,000 SAR
Tax depreciation60,000 SAR
Calculation80,000 − 60,000
Added back to profit when calculating the base20,000 SAR
Don't confuse it with
DepreciationAccounting depreciation follows the standards and the estimate of the asset's life, while tax depreciation follows the Regulations' rates.
in FullScreen ERP
The fixed assets module records each asset's cost and purchase date and calculates its depreciation using the straight-line or declining balance method. Fixed assets