Consumption taxes

Nature of the tax

There is no consumption tax or VAT or sales tax in Saudi Arabia.

Other consumption taxes

Other consumption taxes are levied at the national level and the local level e.g. gasoline tax, aviation fuel tax, liquefied petroleum gas tax, petroleum tax, motor vehicle tax, etc.

Corporate taxes

Tax rate

Tax rate for foreign companies

Resident and Non-resident companies: A resident company is taxed on income arising in the Kingdom, while as a non-resident company carrying out its business activities in the Kingdom through a permanent establishment is taxed on income arising from or related to the permanent establishment.

A corporation is resident if it is registered in accordance with the Regulations for Companies in Saudi Arabia or if it is headquartered in the Kingdom.

Taxable Income: Income tax is levied on a non-Saudi's share in a resident company, while as ‘Zakat' is levied on the Saudi share. Citizens of GCC (Gulf Co-operation Council) countries are treated as Saudis.

The tax base for a resident company is the non-Saudi partner's share of income from any activity in Saudi Arabia less allowed expenses. The tax base for a nonresident carrying out its activities in Saudi Arabia through a permanent establishment is the income arising from the activities of the permanent establishment less allowed expenses.

Capital gains taxation

20% capital gains tax is imposed on the disposal of shares in a residential company. However, as per the new tax regulations, the capital gains on disposal of shares on the Saudi stock exchange are exempt if the shares were acquired after 2004.

Main allowable deductions and tax credit

Bad debt, repairs, natural disasters, charitable donation, R&D expenses, etc.

Other corporate taxes

Capital duty, Payroll Tax, Real property tax, Stamp Tax are imposed on companies in Saudi Arabia. Additionally, Saudi companies of all types and companies owned by nationals of GCC (Cooperation Council for the Arab States of the Gulf) states that conduct business in the Kingdom, and shares of Saudis and nationals of GCC states in joint companies are subject to Zakat. Zakat is an Islamic direct tax on property and income levied at a flat rate of 2.5%.
Social Security (9% of the employee's salary) needs to be paid for Saudi employees, in addition accident insurance at 2% of salary needs to be paid for both Saudi and non-Saudi employees.

Individual taxes

Tax rate

Allowable deductions and tax credit

Same as for companies. For details, visit: Department of Zakat and Income Tax.

Double taxation treaties

Countries with whom a double taxation treaty have been signed

See the tax treaties on the Income Tax website.

Withholding taxes

Withholding tax rates are 5% for dividends, 5% for interest and 15% for royalties.

Bilateral agreement

Sources of fiscal information

Tax Authorities

Department of Zakat and Income Tax

Other domestic resources

The Saudi Network
Arab Net
Expatriate Financial Advice to Saudi Arabia
IPR