Corporate Tax in Saudi Arabia: Everything You Need to Know in 2024

Zakat, Tax and Customs Authority (ZATCA) introduced the corporate tax in Saudi Arabia. The intention is to charge tax on the income earned by the business. Currently, there is no income tax scheme for Individuals in Saudi.

This article explains corporate tax in Saudi Arabia, including what it is, who should pay, the tax rate, and other corporate taxes.

What is the corporate tax in Saudi?

The non-Saudi investors should pay corporate income tax in Saudi Arabia. However, the Saudi citizen investors and citizens of the GCC countries (considered Saudi citizens for Saudi tax purposes) are liable for Zakat and Islamic assessment. 

Suppose a business is owned by Saudi and non-Saudi investors; the portion of income attributable to the non-Saudi investor is subject to corporate tax. Further, ZATCA considers Saudi owner’s income for assessing Zakat.

Who should pay corporate tax in Saudi Arabia?

Under the Saudi Arabia income tax law, the following are subject to income tax:

• A resident capital company where shares are owned directly or indirectly by non-Saudi or non-GCC persons and oil & hydrocarbon businesses with the below exceptions. However, the exception categories shall pay Zakat.
  • Shares owned in a listed resident capital company for speculation trading in the Saudi capital market. 
  • Shares owned directly or indirectly by persons working in oil and hydrocarbon production in a listed resident capital company. Further, these companies directly or indirectly own the shares owned in capital companies.
• A non-saudi natural person doing business in Saudi Arabia
• A non-resident person doing business in Saudi Arabia through a PE.
• A non-resident with other income is subject to tax from sources within Saudi Arabia without a PE.
• A person having investment in natural gas fields
• A person producing oil and other hydrocarbon

What is the corporate tax rate in Saudi?

Saudi corporate income tax rate is 20% of the net adjusted profits. Further, Zakat is charged on the company’s Zakat base at 2.5%. Zakat base means the business’s net worth calculated for Zakat purposes.

Even though the corporate income tax rate is 20%, income from the below two activities is subject to different rates:

• Income generated from oil and hydrocarbon production in Saudi Arabia is subject to a tax range of 50% to 85%.
• The tax base of a person who works in the natural gas business should be independent of the tax base relating to other activities.

What are other corporate taxes in Saudi?

Zakat applies to companies resident in Saudi and other GCC nations @ 2.5%.

Saudi Arabia has no stamp duty, capital duty, or payroll tax. While there is no real estate tax, those businesses may have to pay Zakat on real estate if it is held for speculation. Further, a real estate transaction tax of 5% should be paid when a real estate is disposed of.