Saudi corporate tax and zakat for foreign-owned companies
A Saudi company owned partly by foreigners pays two different levies. Income tax at 20% applies to the foreign share of profits, zakat at 2.5% applies to the Saudi and GCC share of the zakat base.
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Google suggests "ksa corporate tax rate" and "saudi business tax rate" next to "saudi corporate tax". The answer for a foreign-owned company has two parts, because Saudi Arabia levies tax and zakat side by side.
How the split works
| Owner | Levy | Rate |
|---|---|---|
| Non-Saudi, non-GCC shareholders | Corporate income tax on their share of taxable profit | 20% |
| Saudi and GCC shareholders | Zakat on their share of the zakat base | 2.5% |
A company 60% owned by a UK investor and 40% by a Saudi partner, with SAR 2 million of taxable profit, pays income tax of 20% on SAR 1.2 million: SAR 240,000. Zakat is then 2.5% of the Saudi share of the zakat base, which depends on the balance sheet.
Filing
The combined return and payment are due within 120 days after the financial year ends. Companies file through ZATCA's portal with financial statements. Withholding tax on payments to non-residents is filed monthly, within 10 days after the month in which payment was made.
Withholding on payments abroad
Saudi companies paying non-residents for services, royalties, rent and other items withhold at rates from 5% to 20% by payment type. Our article on Saudi companies paying foreign providers covers the rates and filing.
Records ZATCA expects
Accounting books in Arabic or with Arabic translations available, kept in Saudi Arabia, plus invoices that meet the e-invoicing rules in ZATCA's Fatoora waves. Payment records that show each counterparty and amount make the withholding filings simpler to support.
Paying into Saudi Arabia: the local rail
| What | Detail |
|---|---|
| Local rail | sarie instant payments |
| Run by | Saudi Central Bank (SAMA) |
| Settlement | Seconds, 24/7 |
Source: SAMA: sarie. Checked when this guide was last updated; the scheme's own page has the current figures.
Where Rivet fits
Rivet records each receipt and payout with its counterparty, currency and date on one ledger, and exports statements and receipts for your accountant. USD details come on the free Starter plan and EUR and GBP on Growth, with payouts to 120+ countries. Check our eligibility list for Saudi companies. Rivet is not a bank; regulated partner institutions hold the funds. See Accounts.
Questions people ask
What is the corporate tax rate in Saudi Arabia?
20% on the foreign-owned share of taxable profit. Higher rates apply in oil and hydrocarbon production. Saudi and GCC-owned shares pay zakat instead.
How is zakat calculated?
On the zakat base, broadly equity and long-term funding less certain fixed assets and investments, or on adjusted profit if higher, at 2.5%. ZATCA publishes the rules.
When is the return due?
Within 120 days after the end of the financial year, with payment due by the same date.
What about VAT?
Saudi VAT is 15%. Registration is mandatory above SAR 375,000 of annual taxable supplies.
Sources
Alexia compares the accounts, cards and payment tools companies weigh before they switch, and writes Rivet's market guides for founders in a specific country. Prices in Alexia's comparisons come from each provider's own pricing page on the date given in the article, rules come from the regulator or tax authority that sets them, and every source is listed at the end.
More from Alexia M. →This article is general information, not legal, tax or financial advice. Rules and fees change; check the sources above and the provider’s current terms before you act on them.
- saudi corporate tax
- ksa corporate tax rate
- zakat
- zatca
- foreign owned company
- saudi business tax
