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Business Taxation for Expats in Saudi Arabia

Submitted: July 2014

The authority responsible for Saudi tax is the Department of Zakat and Income Tax (DZIT). The website for the DZIT is here.

Corporate tax is charged at a rate of 20% in Saudi Arabia. This rate does not apply to companies involved in investment in the gas industry who are subject to Natural Gas Investment Tax (NGIT) at rates of 30% to 85%. An 85% rate of tax applies to companies involved in the production of hydrocarbons.

Companies must register with the DZIT, failure to register can result in hefty fines.  Companies must withhold tax on any payments made to non-residents with no permanent establishment in Saudi Arabia. The payments must be sent to the DZIT on a monthly basis. The payments to the DZIT must be made no later than 10 days after the end of the month in which the payments were made. Withholding taxes range between 5% and 20% depending on the nature of the payment. Late payments may be subject to fines. Annual tax returns showing withholding tax paid must be filed within 120 days after the year end. Late submission of returns will result in fines.

Companies with a tax liability of greater than SAR2m are required to make three advance tax payments in the following year based on the previous year’s tax liability.

Resident companies are required to pay Zakat which is a religious tithe. It is charged at a rate of 2.5% and based on the net asset value of the company, though the actual calculation is complex.

 

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