Income Tax for Foreign Investors
Written in plain language for general understanding. This is educational content, not legal advice. Based on Saudi royal decrees, regulations, and ministerial decisions.
Saudi National Law
What is this right?
Foreign investors and foreign-owned businesses in Saudi Arabia pay income tax instead of Zakat:
- Rate: Corporate income tax is 20% on net adjusted profits for non-Saudi/non-GCC shareholders.
- Oil and gas: Companies in oil and hydrocarbons pay rates from 50% to 85% depending on the type of activity.
- Permanent establishment: A foreign company with a permanent establishment (PE) in Saudi Arabia is taxable on Saudi-sourced income.
- Filing: Annual tax returns must be filed within 120 days of the fiscal year-end.
- No personal income tax: Saudi Arabia does not levy personal income tax on individuals — neither Saudis nor expatriates.
When does it apply?
- You are a non-Saudi, non-GCC investor with business income from Saudi Arabia.
- Your company has foreign shareholders with profits from Saudi operations.
- You have a permanent establishment in Saudi Arabia.
What should you do?
- Register with ZATCA and obtain a tax identification number.
- File your annual tax return within 120 days of your fiscal year-end.
- Pay any tax due at the time of filing — advance payments may be required in three instalments during the year.
- Maintain proper accounting records in Arabic (or with Arabic translations) as required by ZATCA.
What should you NOT do?
- Do not assume no personal income tax means no tax at all — corporate profits of foreign investors are taxed at 20%.
- Do not miss advance payment deadlines — penalties apply for late payments.
- Do not ignore double taxation treaties — Saudi Arabia has treaties with many countries that may reduce your tax rate.
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