Corporate tax is an income tax levied on a company’s income. In Saudi Arabia, only non-Saudi companies are subject to corporate tax. If a company is owned by both Saudi and non-Saudi owners, the portion of taxable income attributable to the non-Saudi interests will be subject to Saudi income tax. Saudi income is included in the zakat evaluation criteria.
Saudi Arabian Taxes on Residents and Foreign Companies
According to the Saudi Income Tax Law, the following persons are subject to income tax in Saudi Arabia:
Resident legal entities whose shares are held directly or indirectly by persons other than Saudi Arabia. Companies/Non-GCC individuals and persons engaged in the production of petroleum and hydrocarbons, except: Directly or indirectly by persons engaged in the production of petroleum and hydrocarbons of resident legal entities listed on the Saudi Stock Exchange
Shares are held and the shares are owned directly or indirectly by these parties within the company. 4,444 shares of resident legal entities listed on the Saudi Stock Exchange were acquired for speculative purposes through transactions on the Saudi Capital Market.
Non-Saudi residents operating in Saudi Arabia.
Persons engaged in the production of petroleum and other hydrocarbons.
The corporate tax rate is 20% of adjusted net income. Zakat is calculated at 2.5% on the company’s Zakat basis. Zakat basis represents the net assets of a company calculated for Zakat purposes
The income tax rate is 20%. However, he should note that income from the two activities is subject to different tax rates.
In Saudi Arabia, income from oil and hydrocarbon production is subject to taxation at rates ranging from 50 to 85%.
The tax base of a person making natural gas investments must be independent of the tax base of other activities.
Other corporate taxes
Saudi Arabia has no capital, stamp or payroll taxes. There is no real estate tax, but zakat (religious tax) may be levied on real estate if it is held for speculative purposes. The sale of real estate is subject to a 5% real estate transaction tax.
Zakat also applies to companies based in Saudi Arabia and other his GCC countries. This is levied at his flat rate of 2.5% and applies to the total amount of capital held by the taxpayer for more than 12 months and to income not invested in fixed assets. This includes the company’s capital, net income, retained earnings, and reserves not set aside for certain debts.
You can also Register for Corporate Tax Registration on our website: