Saudi Arabia has become one of the most attractive investment hubs in the Middle East, thanks to its strong economy, strategic location, and ambitious Vision 2030 reforms. As foreign investors and local businesses expand operations in the Kingdom, understanding the corporate tax rate in Saudi Arabia is important for compliance and profitability. Understanding the corporate tax in Saudi Arabia is important for businesses operating in the Kingdom. In 2025, this rate remains an important consideration as the government continues to implement Vision 2030 reforms. Our team of experts is here to help you navigate the complex world of corporate tax in Saudi Arabia with ease. With years of experience and a proven track record of success, we are your go-to partner for all your tax needs.
- What Is the Corporate Tax Rate in Saudi Arabia?
- What is Foreign Company Tax in Saudi Arabia?
- Who is Required to Pay Foreign Company Tax in Saudi Arabia?
- Tax Implications of LLCs vs Establishments
- Corporate Tax vs. Zakat in Saudi Arabia
- Withholding Tax (WHT) Rates
- Entities Subject to Corporate Tax
- Key Tax and Compliance Deadlines
- Exemptions & Special Cases
- Tax Filing & Compliance in KSA
- Steps to file corporate tax in Saudi Arabia:
- Special Incentives and Tax Breaks
- Penalties & Non-Compliance Risks
- Practical Example: Tax Calculation
- Why Businesses Should Stay Updated in Saudi Arabia
- Saudi Arabia Corporate Tax Rate List for 2025
- Key Differences Between Zakat and Corporate Tax in Saudi Arabia
- What are the Tax Rates for Foreign Investors in Saudi Arabia?
- What Services Do We Offer?
- FAQs on Corporate Tax in Saudi Arabia
What Is the Corporate Tax Rate in Saudi Arabia?
The standard corporate tax rate in Saudi Arabia is 20% of net adjusted profits. This applies to non-Saudi and non-GCC shareholders or entities operating through a permanent establishment or earning taxable income from Saudi sources. For companies involved in oil and hydrocarbon production, the corporate tax in Saudi Arabia increases significantly, ranging from 50% to 85%.
The corporate tax rate in Saudi Arabia in 2025 remains set at 20% for most foreign-owned companies. This flat rate applies to net adjusted profits and is overseen by the Zakat, Tax and Customs Authority (ZATCA).
- Foreign-owned entities → Subject to 20% corporate tax.
- Saudi/GCC-owned entities → Primarily subject to Zakat (2.5%) instead of corporate tax.
- Mixed ownership companies → Pay both corporate tax (on foreign shareholding) and Zakat (on Saudi shareholding).
This clear distinction makes the Saudi system unique compared to global tax regimes.
What is Foreign Company Tax in Saudi Arabia?
Foreign companies operating in Saudi Arabia are subject to taxation on their Saudi-sourced income. This includes income derived from activities such as sales, services, and investments within the country. The tax rates for foreign companies vary depending on the type of business and the nature of income earned.
Who is Required to Pay Foreign Company Tax in Saudi Arabia?
Foreign companies that conduct business activities in Saudi Arabia are required to pay tax on their income generated within the country. This includes companies that have a permanent establishment, a branch, or an office in Saudi Arabia. Foreign companies need to be aware of their tax obligations and ensure compliance with the local tax laws.
Tax Implications of LLCs vs Establishments
When it comes to taxes, LLCs offer certain advantages over establishments. For example, LLCs can deduct business expenses from their taxable income, reducing the overall tax liability. Additionally, LLC owners can choose to be taxed as a corporation or as a pass-through entity, depending on which option is more advantageous from a tax perspective.
Establishments, on the other hand, do not enjoy the same tax benefits as LLCs. Since business profits are reported on the owner’s personal tax return, the owner may end up paying a higher tax rate on their business income. Furthermore, establishments are not eligible for certain tax deductions and credits available to LLCs.
Corporate Tax vs. Zakat in Saudi Arabia
Saudi Arabia operates a dual taxation system that influences the corporate tax rate in Saudi Arabia for different ownership structures:
- 100% Saudi or GCC-owned companies pay only Zakat at 2.5% on the Zakat base (essentially the company’s net worth).
- Foreign-owned companies pay the full corporate tax rate in Saudi Arabia (20%).
- Mixed ownership companies must allocate taxes proportionately: non-Saudi portions taxed under the corporate tax in Saudi Arabia, and Saudi/GCC portions under Zakat.
Key Difference:
A company with 100% foreign ownership pays only corporate tax, while a company with 100% Saudi ownership pays only Zakat. Mixed ownership means both apply proportionally.
Withholding Tax (WHT) Rates
When payments are made to non-residents, the corporate tax rate in Saudi Arabia can effectively rise due to withholding taxes:
- Dividends, interest, rent, insurance: ~5%
- Royalties, licensing, technical or consulting fees: ~15%
- Management fees: ~20%
Deadlines: WHT must be remitted within 10 days of the month following payment, with returns due within 120 days of the revenue year-end.
Entities Subject to Corporate Tax
The corporate tax rate in Saudi Arabia applies differently depending on business type:
- Foreign-owned companies → Fully taxed at 20%.
- Branches of foreign companies → Profits taxable under corporate tax.
- Joint ventures → Corporate tax applies on foreign investors’ share; Zakat applies on Saudi partners’ share.
- Permanent establishments (PEs) of non-residents → Subject to corporate tax in KSA.
This structure ensures fair taxation while encouraging Saudi participation in businesses.
Key Tax and Compliance Deadlines
- Corporate tax (CIT) and Zakat are due within 120 days of the revenue year-end.
- Withholding tax must be paid monthly, with returns aligned to CIT/Zakat filing deadlines.
Exemptions & Special Cases
Not all businesses pay the corporate tax in Saudi Arabia equally. Some sectors enjoy exemptions or special rules:
- Free Zones – Certain economic cities and free zones may provide tax incentives, though subject to ZATCA rules.
- Oil & Gas Companies – Subject to higher rates (ranging from 50% to 85%) based on investment size.
- SMEs – Supported under Vision 2030 initiatives with tax relief programs and incentives.
- Charitable organizations – Exempt from corporate tax and Zakat under specific conditions.
Tax Filing & Compliance in KSA
Businesses must register with the Zakat, Tax and Customs Authority (ZATCA) and comply with annual filing rules.
Steps to file corporate tax in Saudi Arabia:
- Register online with ZATCA within 60 days of incorporation.
- Maintain proper accounting records as per Saudi standards.
- File annual tax returns within 120 days of the end of the financial year.
- Pay tax due by the filing deadline.
- Submit audited financial statements if required.
The tax year in Saudi Arabia is generally the Gregorian calendar year, but companies may apply for different fiscal years.
Special Incentives and Tax Breaks
Saudi Arabia is encouraging foreign investment by offering incentives that affect the corporate tax rate in Saudi Arabia, such as:
- Regional Headquarters (RHQ) may benefit from 0% CIT for 30 years and 0% WHT on outbound payments.
- Special Economic Zones (SEZs) may offer 5% corporate tax for up to 20 years, along with customs and VAT relief, and 0% WHT on profit repatriation.
Penalties & Non-Compliance Risks
ZATCA imposes strict penalties for non-compliance:
- Late filing → Penalty of 1% of revenue, up to SAR 20,000.
- Late payment → 5% to 25% penalty, depending on delay duration.
- Incorrect tax returns → Penalty up to 25% of the unpaid tax.
- Failure to register → Penalties and possible suspension of business operations.
Foreign investors are strongly advised to engage local tax advisors to avoid costly mistakes.
Practical Example: Tax Calculation
Imagine a company with 100% foreign ownership that made SAR 10 million net profit in 2025:
- Corporate tax @20% = SAR 2 million payable.
Now, imagine a 50-50 joint venture between a Saudi and a foreign partner, with the same SAR 10 million profit:
- Saudi partner → Pays Zakat (2.5%) on SAR 5 million share.
- Foreign partner → Pays Corporate tax (20%) on SAR 5 million share = SAR 1 million.
Why Businesses Should Stay Updated in Saudi Arabia
The corporate tax rate in Saudi Arabia is stable at 20%, but regulations may evolve under Vision 2030. Businesses should:
- Consult tax advisors for compliance.
- Monitor ZATCA updates for regulatory changes.
- Plan finances strategically to maximize incentives.
- Leverage tax treaties to avoid double taxation.
Saudi Arabia Corporate Tax Rate List for 2025
The Saudi Arabia corporate tax highlights the Kingdom’s structured approach to taxation under Vision 2030 reforms. Standard foreign-owned companies are subject to a 20% corporate tax rate, while oil and hydrocarbon firms face higher rates ranging from 50% to 85%. In contrast, 100% Saudi or GCC-owned businesses pay Zakat at 2.5% of their Zakat base, and mixed-ownership firms are taxed proportionally under both systems. Special incentives exist, including 0% corporate tax for 30 years for Regional Headquarters (RHQ) and a reduced 5% corporate tax in Special Economic Zones (SEZs) for up to 20 years. Additionally, withholding tax applies to payments to non-residents, ranging from 5% on dividends and rent to 20% on management fees, ensuring a comprehensive yet investment-friendly tax framework.
The Saudi Arabia Corporate Tax Rate list is as follows:
| Business Type / Income Source | Tax Type | Rate in 2025 |
|---|---|---|
| Standard foreign-owned company (non-GCC) | Corporate Tax | 20% of net adjusted profits |
| Oil & Hydrocarbon production companies | Corporate Tax | 50% – 85% (progressive rate) |
| 100% Saudi or GCC-owned companies | Zakat | 2.5% of Zakat base (net worth) |
| Mixed Saudi & foreign-owned companies | CIT + Zakat | Proportional (foreign share taxed at 20%, Saudi/GCC share at 2.5%) |
| Regional Headquarters (RHQ) | CIT + WHT | 0% Corporate Tax & 0% WHT for 30 years |
| Special Economic Zones (SEZs) | Corporate Tax | 5% up to 20 years + VAT/customs relief |
| Withholding Tax – Dividends, Interest, Rent | Withholding Tax | 5% |
| Withholding Tax – Royalties, Consulting Fees | Withholding Tax | 15% |
| Withholding Tax – Management Fees | Withholding Tax | 20% |
Key Differences Between Zakat and Corporate Tax in Saudi Arabia
Both zakat and corporate tax are important considerations for businesses operating in Saudi Arabia. While zakat is a religious obligation for Muslim business owners, corporate tax is a legal requirement that must be adhered to by all companies.
- Nature of Taxation: Zakat is a religious duty that is based on Islamic principles, while corporate tax is a legal requirement imposed by the government.
- Target Entities: Zakat applies to individual Muslims who meet specific wealth criteria, while corporate tax applies to businesses operating in Saudi Arabia.
- Purpose of Taxation: Zakat is intended to promote social welfare and charitable giving, while corporate tax is primarily used to generate revenue for the government.
- Tax Rate: Zakat is generally calculated at a rate of 2.5% of an individual’s eligible wealth, while the corporate tax rate in Saudi Arabia is currently set at 20% of profits.
What are the Tax Rates for Foreign Investors in Saudi Arabia?
Foreign investors in Saudi Arabia are subject to different tax rates depending on the type of business entity and income generated. Currently, the corporate income tax rate for foreign investors is set at a flat rate of 20%. However, certain industries or activities may have specific tax rates or exemptions, so it is essential to consult with a tax advisor to determine the applicable rates for your business.
Additionally, value-added tax (VAT) was introduced in Saudi Arabia in 2018, with a standard rate of 5%. Foreign investors operating in sectors subject to VAT must comply with the regulations and ensure proper documentation and filing to avoid penalties.
What Services Do We Offer?
- Tax Planning: We work closely with you to develop a customized tax plan that minimizes your tax liability while maximizing your business’s financial growth.
- Tax Compliance: Our team stays up-to-date on all tax regulations and deadlines to ensure your business remains in good standing with the Saudi Arabian tax authorities.
- Audit Support: In the event of an audit, we will represent your business and handle all communications with the tax authorities, giving you peace of mind during a stressful time.
- Tax Filing: We take care of filing your corporate tax returns accurately and on time, so you can focus on running your business without the hassle of paperwork.
Staying updated ensures smooth operations and protects profitability.
In conclusion, simplifying your corporate tax in Saudi Arabia doesn’t have to be a headache. With our team of experts by your side, you can streamline your tax processes and achieve maximum savings. Don’t let tax complexities hold your business back – trust us to provide you with tailored solutions that ensure compliance and optimization. Contact us today to learn more about how we can help simplify your corporate tax in Saudi Arabia.
FAQs on Corporate Tax in Saudi Arabia
What is the 2025 corporate tax rate in Saudi Arabia?
The standard corporate tax rate in Saudi Arabia is 20% for foreign-owned companies.
Do Saudi-owned businesses pay corporate tax?
No, Saudi and GCC-owned companies primarily pay Zakat (2.5%), not corporate tax.
Are oil companies taxed differently?
Yes, oil and hydrocarbon companies face higher tax rates between 50% and 85%.
Are there tax treaties to prevent double taxation?
Yes, Saudi Arabia has signed multiple double taxation treaties with different countries.
Can SMEs get corporate tax exemptions?
Yes, SMEs benefit from incentives and relief programs under Vision 2030.
