Key points
- Zakat applies to Saudi and GCC ownership at 2.5% of the zakat base (Hijri year).
- Corporate income tax applies to non-Saudi ownership at 20% of taxable profit.
- VAT is 15%; most real estate sales carry a 5% real estate transaction tax.
- Objections to ZATCA assessments have strict deadlines.
Zakat or income tax — it depends on who owns the company
| Owner | Charge | Basic rate |
|---|---|---|
| Saudi and GCC nationals (and entities they own) | Zakat | 2.5% of the zakat base for a Hijri year |
| Non-Saudi, non-GCC owners | Corporate income tax | 20% of taxable profit |
A company owned 60% by Saudis and 40% by a foreign company, for example, pays zakat on the Saudi share and income tax on the foreign share. Special regimes apply in certain sectors.
Other taxes companies meet
- VAT at a standard rate of 15% on most supplies.
- Withholding tax on many payments to non-residents, such as services, royalties and dividends, at rates that depend on the payment type and any tax treaty.
- Real estate transaction tax of 5% on most sales of real estate.
- Customs and excise duties on relevant goods.
Disputing an assessment
- Read the assessment and the reasons carefully, and diarise the objection deadline.
- File an objection with ZATCA with supporting documents and arguments.
- If the objection is rejected, appeal to the tax violations and disputes committees.
- Further appeal lies to the appellate committee.
Zakat and tax disputes combine accounting and law. Lawyers and accountants usually work together on the arguments and evidence.
Questions clients ask
Does a 100% foreign-owned company pay zakat?
Generally no — a company wholly owned by non-Saudi, non-GCC shareholders is subject to corporate income tax rather than zakat. Ownership through intermediate companies can change the analysis, so check with your tax adviser.
What is the deadline to object to a ZATCA assessment?
Objections must be filed within the statutory period from notification of the assessment. Deadlines are strict, so start immediately when an assessment arrives.
Do individuals pay income tax in Saudi Arabia?
Saudi Arabia does not levy personal income tax on employment income. Non-resident individuals can be subject to tax or withholding on certain Saudi-source income.
Official sources
Laws change. We cite the official text so you can check the current version.
This page is general information, not legal advice for your situation.