Tax Rights
No personal income tax, 15% VAT, Zakat for Saudi businesses, ZATCA e-invoicing, Real Estate Transaction Tax, and tax disputes via GSTC.
Covered in this guide:
You pay no personal income tax in Saudi Arabia. Businesses face 15% VAT under the VAT Law (Royal Decree No. M/113 of 2017) — the highest in the Gulf — plus 20% corporate income tax on foreign-owned profits or 2.5% Zakat for Saudi/GCC owners under Royal Decree No. M/1 of 2004. ZATCA runs everything, with mandatory FATOORA e-invoicing. Property transfers carry a 5% Real Estate Transaction Tax. You can object to assessments within 60 days, then appeal to the General Secretariat of Tax Committees (GSTC).
Key Laws
Income Tax Law
Royal Decree No. M/1 of 2004
20% income tax on foreign-owned business profits
Zakat Collection Regulations
Royal Decree No. 17/2/28/8634 (as amended)
2.5% Zakat levy on Saudi and GCC business owners
VAT Law
Royal Decree No. M/113 of 2017
15% VAT — highest rate in the Gulf
Excise Tax Law
Royal Decree No. M/86 of 2017
100% on tobacco and energy drinks, 50% on sugary beverages
Real Estate Transaction Tax Regulations
Royal Decree (October 2020)
5% RETT replacing stamp duty on property transfers
Zakat Obligations for Saudi-Owned Businesses
Saudi-owned businesses and GCC nationals pay Zakat instead of income tax — a system rooted in Islamic finance that functions differently from any Western tax:Rate: Zakat is levied at 2.5% of the compa...
Income Tax for Foreign Investors
Foreign investors and foreign-owned businesses in Saudi Arabia pay income tax instead of Zakat — this dual system means your tax treatment depends entirely on the nationality of the shareholders:Rate:...
VAT Registration & Compliance
Saudi Arabia charges 15% VAT — the highest rate in the Gulf — and enforces compliance through mandatory e-invoicing:Mandatory registration: Businesses with annual taxable supplies exceeding SAR 375,00...
Withholding Tax Rules
When Saudi-based companies pay certain amounts to non-residents, they must withhold tax at source — this is one of the main ways the Kingdom taxes cross-border transactions:Management fees: 20% withho...
Tax Audit Rights & ZATCA Procedures
If ZATCA audits your tax or Zakat returns, you have specific rights — but ZATCA has become significantly more active in enforcement since the 2021 merger that combined tax and customs into a single au...
Tax Refund & Offset Claims
If you have overpaid tax or have excess VAT input credits, ZATCA provides refund and offset mechanisms:Income tax/Zakat refund: If ZATCA's final assessment is lower than what you paid, you can request...
Transfer Pricing Rules
Saudi Arabia requires transactions between related parties to be priced at arm's length — and ZATCA has ramped up enforcement significantly since the 2019 bylaws:Arm's length principle: Transactions b...
Tax Dispute Resolution & Appeals
If you disagree with a ZATCA tax or Zakat assessment, the Kingdom provides a structured dispute resolution path through the General Secretariat of Tax Committees (GSTC):Internal objection: File an obj...