Saudi Arabia has no personal income tax system.
Income tax is not imposed on income of individuals if it is received only from work in Saudi Arabia.
Income not connected with labor activity is taxed as a legal entity or permanent establishment.
A non-resident person without permanent establishment who receives income from a source in Saudi Arabia is taxed in accordance with the withholding tax (WHT) provisions.
The profit tax rate is 20% of the net adjusted profit.
Legal entities in Saudi Arabia must also pay zakat (compulsory religious tax in Islamic law; also applies in other countries of the Persian Gulf) on an annual basis. It is charged at a fixed rate of 2.5% of the total capital resources of the taxpayer retained for over 12 months and income not invested in the fixed assets.
The Gulf Cooperation Council countries have signed the General VAT Principles, which form the legal basis for the introduction of a VAT system in each of the GCC member states (the Kingdom of Bahrain, the State of Kuwait, the Sultanate of Oman, the State of Qatar, the Kingdom of Saudi Arabia and the UAE).
Saudi Arabia and the UAE introduced VAT in January 2018.
All goods or services imported to Saudi Arabia are subject to a 15% VAT, unless marked as exempt from VAT or having a zero rate. Some examples of goods and services to which the standard rate applies:
Payments made by a resident party or a permanent establishment to a non-resident party for services provided are subject to withholding tax. The rates vary from 5% to 20% depending on the type of service.
The domestic withholding tax rate is 5% on dividends, 5% on interests and 15% on royalties.
There is no real estate tax in Saudi Arabia. However, there is the White Land Tax (WLT).
In accordance with Royal Decree No. M/4 dated 24 November 2015 and to Council of Ministers Decision No. 377 dated 13 June 2016, the White Land Tax Law ("the WLT Law") and its implementing regulations were issued.
In accordance with the WLT Law, owners of vacant urban land (also called “unused land or undeveloped land”) intended for residential or commercial use must pay an annual tax of 2.5% of the market value of the land.
Vacant land means land that is not used for its purposes in accordance with relevant laws and regulations applicable at the time of declaration.
None.
Social insurance contributions are paid monthly based on the monthly basic salary plus dwelling (paid for or provided by the employer) with the upper limit of SAR 45 000, calculated at a 2% rate for employees who are not citizens of Saudi Arabia (please note that this is not social insurance but professional insurance) and shall be paid by the employer.
For Saudi employees the rate is 22% and paid by both the employee (10% = 9% of social insurance + 1% of unemployment insurance [SANED]) and the employer (12% = 9% of social insurance + 2% of professional insurance + 1% of unemployment insurance [SANED]).
RETT is charged at the rate of 5% of the total value of the outgoing real estate irrespective of its condition, form or usage at the time of disposal.
It includes land and what is built on it whether the disposal took place on that land in its current state or after an enterprise has been built on it, whether all property was disposed of or only part of it, for example, subdivided, common, residential unit or another type of real estate, whether its disposal was certified or not.
The rules provide certain exceptions, which may be available in certain cases.
Saudi Arabia has no special rules for controlled foreign companies. However, the gross income received by capital company resident in Saudi Arabia from its activity and branches outside Saudi Arabia is subject to taxation in Saudi Arabia (when meeting relevant conditions).
Transfer pricing regulations in Saudi Arabia started to apply in 2018.
On 7 April 2023, ZATCA declared approval of the proposed amendments to the transfer pricing regulations, which introduce the following:
The above amendments will apply to financial years starting on or after 1 January 2024.
Saudi Arabia has entered into 57 Double Tax Conventions (DTCs, double tax treaties) with the following jurisdictions:
57 DTCs: Austria, Azerbaijan, Albania, Algeria, Bangladesh, Belarus, Bulgaria, Great Britain, Venezuela, Hungary, Vietnam, Gabon, Hong Kong, Georgia, Greece, Egypt, India, Jordan, Ireland, Spain, Italy, Kazakhstan, Cyprus, China, Kosovo, Kyrgyzstan, Latvia, Luxembourg, Macedonia, Malaysia, Malta, Mexico, Morocco, the Netherlands, the UAE, Pakistan, Poland, Portugal, Russia, Romania, Singapore, Syria, Tajikistan, Taiwan, Tunisia, Turkmenistan, Turkey, Uzbekistan, Ukraine, France, the Czech Republic, Switzerland, Sweden, Ethiopia, South Africa, South Korea, Japan.
In addition, Saudi Arabia has signed and ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The Multilateral Convention came into force for Saudi Arabia on 1 July 2020.
There are no foreign exchange controls in Saudi Arabia.