Middle East · Tax guide

Saudi Arabia

Saudi Arabia taxes businesses through Zakat for Saudi and GCC owners and corporate income tax for foreign owners, alongside VAT at 15%, mandatory e-invoicing, withholding tax on payments abroad, transfer pricing rules and a real estate transaction tax. Everything is administered by the Zakat, Tax and Customs Authority (ZATCA).

Updated 1 October 2026 · 22 of 25 figures checked against official sources

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At a glance

Corporate income tax
20%

On the foreign-owned share of profits

Zakat
2.5%

On the Zakat base of the Saudi and GCC-owned share

VAT
15%

Registration above SAR 375,000 a year

Withholding on dividends
5%

Royalties 15%, management fees 20%

Real estate transaction tax
5%

On the value of each property disposal

Annual return
120 days

After the end of the financial year

Zakat and corporate income tax

Who pays what depends on ownership. Companies wholly owned by Saudi or GCC nationals pay Zakat at 2.5% of their Zakat base, which broadly means equity and long-term financing less long-term assets. Foreign-owned companies, branches and permanent establishments pay corporate income tax at 20% on taxable profits from Saudi Arabia.

Mixed-ownership companies pay both: income tax on the foreign shareholders' share of profit and Zakat on the Saudi and GCC shareholders' share, filed together in one return. The annual Zakat and income tax return is due within 120 days of the financial year-end.

  • Natural gas investment is taxed at 20%, under the Income Tax Law as amended in 2017.
  • Oil and hydrocarbon production has its own scale, reaching 85% at the top.
  • Saudi individuals running a business pay Zakat on business assets; resident foreigners trading in their own name pay income tax.

VAT

VAT is charged at 15% on most goods and services, with zero-rating for exports, international transport and some medicines and medical equipment, and exemptions for most financial services and residential rent.

Registration is mandatory once taxable supplies exceed SAR 375,000 over twelve months, and voluntary above SAR 187,500. Registering late carries a penalty of SAR 10,000. Larger businesses file monthly returns; others file quarterly.

E-invoicing (FATOORAH)

Every VAT-registered business must issue electronic invoices. In the first phase, invoices are generated and stored electronically in a structured format; in the second phase, businesses connect their systems to ZATCA's FATOORAH platform, which clears or reports each invoice. ZATCA brings taxpayers into the second phase in waves by revenue and notifies each wave in advance.

Withholding tax on payments abroad

Payments from Saudi sources to non-residents are subject to withholding tax, which the payer deducts and pays to ZATCA. The return and payment are due within 10 days after the end of the month of payment; late payment costs 1% of the unpaid tax for each month of delay.

  • Dividends: 5%
  • Interest and loan charges: 5%
  • Technical and consulting services: 5%
  • Royalties: 15%
  • Management fees: 20%
  • Other payments and services: 15%
  • A double tax treaty can reduce these rates when the recipient provides the required forms.

Transfer pricing

Transactions between related parties must be priced at arm's length. Taxpayers file a disclosure form of controlled transactions with the annual return, and larger groups keep a local file and master file. Documentation must be provided within 30 days of a ZATCA request.

Real estate transaction tax

Disposals of real estate carry the real estate transaction tax at 5% of the value, paid before the transfer is registered. Transfers of shares can also be caught: disposing of 30% or more of a company whose real estate is worth at least 50% of its assets is treated as a real estate transaction.

Many transfers are exempt, including inheritance, certain transfers within a family and some intra-group restructurings.

Excise tax

Producers, importers and stockholders of excise goods register for excise tax. Tobacco products are taxed at 100%, energy drinks at 100% and e-cigarettes and their liquids at 100%. Sweetened drinks are taxed per litre by sugar content since 1 January 2026, replacing the flat 50%.

Key dates

  • Every monthWithholding tax return and payment, within 10 days after the month-end
  • Monthly or quarterlyVAT return and payment, by the end of the month after the period
  • Each financial yearZakat and income tax return, within 120 days of the year-end, with the disclosure form of controlled transactions
  • On requestTransfer pricing documentation, within 30 days

Figures and sources

25 figures

Indicative only. This assessment is a high-level overview based on the information you provided and current ZATCA regulations. It is not tax or legal advice. Consult a qualified Saudi tax advisor before making compliance decisions.