Telephone Numbers
Telephone Numbers
For detailed information +90 542 381 3868'Call.
Note (July 2026): The tax rates, amounts and regulatory details on this page were compiled as of July 2026 and may change over time. The tables and rates are for information only; for final and up-to-date figures please consult the official website of the Saudi Zakat, Tax and Customs Authority (ZATCA) at zatca.gov.sa. For details on the incorporation process, see our Company Formation in Saudi Arabia page.
Table of Contents
As the largest economy in the Gulf Cooperation Council (GCC), Saudi Arabia has significantly modernised its tax architecture in recent years under the Vision 2030 reform programme. These reforms, aimed at reducing dependence on oil revenue and diversifying public income, have materialised through the introduction of VAT, the phased roll-out of e-invoicing and stronger digital filing infrastructure. While the Kingdom is notable for levying no personal income tax, it administers corporate income tax, Zakat, value added tax (VAT) and withholding tax under a single roof through the Zakat, Tax and Customs Authority (ZATCA).
The critical point for investors is this: a company's tax burden is determined by the proportion of foreign and local (Saudi/GCC national) ownership in its capital structure. The profit share attributable to foreign partners is subject to corporate income tax, whereas the share attributable to Saudi and GCC nationals is subject to Zakat. In mixed ownership, both obligations apply in parallel in proportion to the relevant shares. This dual structure is the most distinctive feature separating Saudi Arabia from many other jurisdictions and heightens the importance of correct tax planning. The legal form of the entity (limited liability company, joint-stock company, branch or regional headquarters) also directly affects the applicable regime.
The standard corporate income tax rate in Saudi Arabia is 20%, applied to the net profit attributable to foreign capital. This rate applies to foreign investors, foreign partners and non-resident entities generating Saudi-sourced income. No distinction is made between domestic and foreign companies in administrative procedures; however, the basis of taxation depends entirely on the ownership structure. Corporate tax is calculated on the profit of the relevant fiscal year and declared to ZATCA on an annual basis.
When computing taxable profit, documented expenses directly related to earning income may be deducted. Depreciation rules, loss carry-forwards and certain expense limitations are set out in detail in the legislation, which is why working with a qualified tax advisor is highly important.
Certain strategic sectors apply rates outside the standard band. In oil and hydrocarbon production activities, the tax rate can rise progressively to between 50% and 85%, depending on the scale of capital investment. A separate regime applies to natural gas investments. These higher rates reflect the high profit margins and natural-resource nature of these sectors and do not apply to general commercial activities.
Zakat is a religiously-based financial obligation levied on the capital share owned by nationals of Saudi Arabia and other GCC countries. The Zakat rate is 2.5% of the Zakat base (capital base). Unlike corporate tax, it is calculated not only on profit but on the company's capital base (equity, provisions and certain adjustments) determined by a specific methodology.
Wholly Saudi/GCC-owned companies are subject only to Zakat; wholly foreign-owned companies are subject only to corporate income tax. In mixed-capital companies, the base is split according to ownership ratios and both obligations are calculated in parallel. The Zakat return is likewise filed annually with ZATCA.
Saudi Arabia first introduced VAT at 5% in early 2018, then tripled it to 15% in July 2020 to strengthen its fiscal balance. As confirmed by ZATCA, the standard VAT rate stands at 15% as of July 2026. VAT is an indirect consumption tax levied on supplies of goods and services and on imports, ultimately borne by the end consumer.
Exports and certain international transport and services fall under 0% (zero-rated) VAT; input VAT on these transactions may be recoverable. Some financial services, residential leases and certain healthcare/education services may be exempt. VAT registration is mandatory for businesses whose annual taxable supplies exceed SAR 375,000, while those exceeding SAR 187,500 may register voluntarily. VAT returns are filed monthly or quarterly depending on turnover.
Certain payments made to non-resident parties in Saudi Arabia are subject to withholding tax. Rates vary between 5% and 20% depending on the nature of the payment. In practice, dividends and interest are generally taxed at 5%, rent and technical service fees at 5%-15%, and intra-group management fees at 20%. The tax is withheld by the paying Saudi company and declared and paid to ZATCA.
The double taxation avoidance agreements Saudi Arabia has signed with many countries may allow these rates to be reduced or eliminated on payments to residents of the counterparty state. To benefit from treaty provisions, documentation requirements such as a certificate of residency must be met.
Saudi Arabia has no personal income tax (0%). Salaries, wages and self-employment income are not subject to personal income tax; this is one of the key factors making the country highly attractive for skilled labour and senior executives. Nevertheless, indirect obligations such as social insurance (GOSI) contributions do exist.
Real estate transfers are subject to a 5% Real Estate Transaction Tax (RETT) on the sale value. Introduced in 2020, this tax replaced VAT on property sales and applies on a per-transaction basis. Certain transfer types (for example inheritance transfers) may be exempt.
To protect public health, an excise tax of 100% applies to tobacco products and energy drinks, and 50% to carbonated/sweetened beverages. This tax is collected at the production or import stage of the relevant goods.
In line with Vision 2030 goals, Saudi Arabia offers comprehensive incentives to attract foreign direct investment. Under the Regional Headquarters (RHQ) programme, multinational companies relocating their headquarters to the Kingdom are granted powerful advantages such as 0% corporate income tax and selected withholding tax exemptions for 30 years. Special Economic Zones (SEZ) further provide reduced corporate tax rates, customs facilitation and relaxed ownership rules.
Investors operating in priority sectors such as technology, renewable energy, logistics, tourism and industry may benefit from incentive packages, infrastructure support and accelerated licensing processes. Application and eligibility conditions should be assessed carefully to benefit from these incentives.
Saudi Arabia has become one of the region's pioneers in digital tax compliance through the Fatoora e-invoicing system led by ZATCA. The system is designed in two phases: the generation phase requires electronic invoices to be issued in a standard format, while the integration phase requires invoices to be transmitted to the ZATCA platform in real time. Businesses are onboarded in waves based on turnover thresholds.
Tax compliance covers timely registration, accurate declaration, proper retention of books and records, and payment on time. In cases of late filing, underpayment or incorrect invoicing, ZATCA may impose administrative penalties. It is therefore critical for companies to complete their tax registrations and establish a sound accounting infrastructure before commencing operations.
Suppose a limited liability company established in Saudi Arabia has 60% of its capital owned by a foreign investor and 40% by a Saudi partner. In this case, the 60% of the company's taxable profit attributable to the foreign share is subject to 20% corporate tax, while the portion attributable to the Saudi partner is subject to 2.5% Zakat on the relevant capital base. This split makes it essential to structure the shareholders' agreement and accounting records correctly from the outset so that the total fiscal burden can be computed accurately.
Although Saudi Arabia's 20% corporate tax rate is higher than the 9% standard corporate tax applied in the United Arab Emirates, the Kingdom's domestic market size, volume of public tenders and incentives such as the RHQ programme offer strong advantages that offset this gap for many multinationals. While the 15% VAT rate is among the highest in the region, export-oriented businesses can protect cash flow by benefiting from zero-rated transactions. The right choice of country and structure should therefore be assessed based not only on the nominal rate but on the sector, market and long-term strategy.
| Tax Type | Rate (July 2026) | Basis of Application |
|---|---|---|
| Corporate Income Tax | 20% | Net profit of foreign capital share |
| Zakat | 2.5% | Saudi/GCC capital base |
| VAT | 15% | Supplies of goods & services, imports |
| Withholding Tax | 5–20% | Payments to non-residents |
| Personal Income Tax | 0% | Not applied |
| Real Estate Transaction Tax (RETT) | 5% | Property sale value |
| Excise (Tobacco) | 100% | Tobacco & energy drinks |
| Oil/Hydrocarbons | 50–85% | Sector-specific graduated rate |
With no personal income tax, a competitive 20% corporate tax and strong incentive programmes, Saudi Arabia is one of the region's most attractive investment hubs. However, the dual Zakat–corporate tax structure, withholding tax rules, 15% VAT compliance and Fatoora e-invoicing obligations require accurate, professional planning. A poorly structured ownership model can create an unnecessary tax burden or compliance penalties.
At World Company Setup, we support you throughout the entire journey — from company formation in Saudi Arabia to tax registration, accounting infrastructure and incentive applications. To get started immediately or optimise your tax burden, you can request a quotation and consultancy.
Saudi Arabia holds an important place in the global economy thanks to its strategic location and rich resources. In recent years, it has attracted the attention of international investors with its tax reforms. In this article, we will take a detailed look at tax rates in Saudi Arabia.
The standard corporate income tax rate in Saudi Arabia is 20% on the net profit attributable to foreign capital. In certain sectors such as oil and hydrocarbon production, the rate can rise to between 50% and 85%.
The standard VAT rate in Saudi Arabia has been 15% since July 2020 and, as confirmed by ZATCA, remains 15% as of July 2026. Exports and certain international services are zero-rated at 0%.
No. Saudi Arabia levies no personal income tax on salaries and wages (0%), making the country attractive for skilled employees and executives. However, indirect obligations such as social insurance (GOSI) contributions do apply.
Corporate tax (20%) is levied on the net profit of the foreign capital share, whereas Zakat (2.5%) is calculated on the capital base attributable to Saudi and GCC national partners. In mixed ownership, both obligations apply together in proportion to the shares.
Yes. Under the Regional Headquarters (RHQ) programme, multinationals relocating their HQ to the Kingdom receive up to 30 years of 0% corporate tax and selected withholding tax exemptions. Special Economic Zones (SEZ) also provide reduced rates and customs facilitation.
+90 542 381 3868
+971 58 5204103