Tax reforms are part of the Saudi 2030 Vision and the economic development in Saudi Arabia. Recently, Saudi Arabia introduced the value-added tax (VAT) and real estate transaction tax (RETT). There is no individual income tax regime in Saudi Arabia; however, income tax or Zakat is imposed on registered corporations.
Persons Subject to Tax
Corporations in Saudi Arabia should register with Zakat, Tax and Customs Authority. Further, companies are subject to different taxation system (income tax or Zakat) depending on the company's owner's nationality, discussed as follows:
Persons Subject to Tax or Zakat
Companies %100 owned by Saudi nationals or GCC nationals are subject to Zakat only.
Companies %100 owned by non-resident Saudi nationals are subject to income tax only.
Companies jointly owned by both Saudi and foreign nationals are subject to Zakat and income tax.
Companies wholly owned by non-Saudi or non-GCC nationals are subject to income tax only.
Generally, corporations owned by Saudi nationals are subject to Zakat, which is 2.5%. On the other hand, corporations conducting businesses in Saudi Arabia owned by non-Saudi nationals are generally subject to 20% income tax rate. Other income tax percentages are applicable depending on the activity and amount of investments
Kindly be informed that law firms in Saudi Arabia are not allowed to advise on tax related issues. Law firms provide tax advice in relation to litigation purposes only.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
