Manufacturing Accounting & Tax Services in Saudi Arabia

Our Saudi manufacturing accounting services are designed for businesses across the production landscape in the Kingdom:

• Light Manufacturing & Assembly Operations: Businesses in industrial cities that import components and assemble finished products for the local or regional market.
• Food & Beverage Producers: Companies that need to manage batch costing, track perishable inventory, and comply with SFDA (Saudi Food and Drug Authority) regulations.
• Contract Manufacturers: Businesses producing goods for other brands, who need to precisely track costs and margins on a per-client, per-job basis.
• Companies Receiving SIDF Funding: Manufacturers who have received loans from the Saudi Industrial Development Fund and must adhere to strict financial reporting and audit requirements.

From the moment you start procuring raw materials, specialized manufacturing accounting is necessary. It becomes absolutely critical when:

• You Begin Production: You must have a system compliant with IFRS (specifically IAS 2) to track the cost of inventory through its various stages.
• You Invest in Plant & Machinery: You need to manage complex depreciation schedules and adhere to financing covenants if you have loans from SIDF or other banks.
• You Need to Price Your Products: To price goods profitably, you must have an accurate Cost of Goods Sold (COGS), which includes direct materials, direct labour, and an allocated portion of factory overheads.
• You File Your Zakat/Tax Return: ZATCA has specific rules for inventory valuation. Incorrect inventory accounting is a major red flag during a tax audit.
• You Issue an Invoice: Every B2B sale must be accompanied by a ZATCA-compliant e-invoice (Fatoorah), which requires an approved accounting system.

Outsourcing manufacturing accounting provides access to a highly specialized skillset. The costs reflect the complexity of cost accounting and inventory management in the KSA environment.

• Small Operations: SAR 8,000 - SAR 15,000 per month. This typically includes core cost accounting, inventory tracking, and ZATCA-compliant financial reporting.
• Medium-Sized Plants: SAR 15,000 - SAR 30,000+ per month. This service level adds more detailed job costing, variance analysis (standard vs. actual costs), and KPI reporting.
• Large or Complex Operations: Custom pricing, often including virtual CFO services for supply chain management and capital investment planning.

The financial risks in manufacturing are directly tied to the management of costs and inventory. Common pitfalls in Saudi Arabia include:

• Inaccurate Inventory Valuation: Failing to comply with IAS 2 for valuing inventory can lead to inaccurate financial statements and is a major red flag for auditors and ZATCA, potentially leading to significant tax adjustments.
• Improper Overhead Allocation: Not correctly allocating factory overheads (like rent, utilities, and indirect labor) into the cost of your inventory results in a distorted view of product profitability and non-compliant accounts.
• ZATCA E-invoicing Violations: Failure to generate and report invoices through a ZATCA-approved system can lead to immediate and significant fines.
• Inaccurate COGS: An incorrect Cost of Goods Sold figure means your gross profit is wrong, leading to flawed business decisions and incorrect Zakat/Tax payments.

Cost accounting is a specific discipline that most general accountants do not specialize in. Hiring an experienced in-house management accountant or financial controller in Saudi Arabia is a significant expense. Outsourcing to YourLegal's manufacturing finance partners provides a cost-effective alternative.

We bring the expertise to implement a robust cost accounting system for your business, ensuring you can accurately track inventory, calculate a defensible COGS, and comply with all ZATCA regulations. Our detailed reports provide clear visibility into your production costs and product margins, empowering you to make smarter decisions about pricing, efficiency, and investment. This allows you to focus on innovation and production, while we ensure your financial operations are a source of strength and competitive advantage in the Kingdom.