Corporate tax in Saudi Arabia is a critical consideration for any foreign investor or international company planning to enter the Kingdom.
So understanding the tax obligations, rates, and compliance requirements is essential to avoid fines, streamline operations, and optimize financial planning.
With Saudi Arabia’s evolving regulatory framework and Vision 2030 encouraging foreign investment, staying compliant has never been more important.
So foreign-owned companies, branches of international firms, and mixed-ownership entities must navigate corporate tax rules alongside zakat and other levies.
And today we’re going to lead you on a journey to provide a practical overview, helping investors make informed decisions while showcasing how GOFICO can simplify corporate tax compliance.
Keep Reading to know more …,
What is the corporate tax in Saudi Arabia?
Corporate tax in Saudi Arabia is levied on the net adjusted profits of businesses owned wholly or partially by foreign shareholders.
It ensures that non-Saudi investors benefiting form corporate services in Saudi Arabia contribute to the Kingdom’s fiscal system, while Saudi/GCC investors are primarily subject to zakat, an Islamic levy.
In other words, corporate tax applies primarily to non-resident-owned entities, while mixed-ownership companies are taxed on the foreign share.
Depending on your business structure, corporate tax may coexist with zakat obligations, making compliance a multi-layered process.
Who Should Pay Corporate Tax in Saudi Arabia?
Corporate tax applies to the following entities:
● Companies owned wholly or partially by foreign (non-Saudi/GCC) shareholders
● Branches of foreign companies operating in Saudi Arabia
● Permanent establishments (PEs) of non-resident entities
● Mixed ownership entities, where the foreign share is subject to corporate tax
● Certain high-profit industries, including oil and hydrocarbon sectors
For example, a mixed-ownership company with 60% foreign shareholders would pay corporate tax on the 60% foreign-owned portion, while the Saudi share may be subject to zakat.
What Is the Corporate Tax Rate in Saudi Arabia?
The standard corporate tax rate in Saudi Arabia is 20% of net adjusted profits.
However, certain industries, especially oil, gas, and hydrocarbons, may face higher rates ranging from 50% to 85% depending on the activity.
Special Industry Tax Rates
● Oil and hydrocarbon production: 50–85%, depending on the sector
● Natural gas operations: Independent tax base applied
This dual-rate system highlights the importance of careful tax planning, especially for energy-sector investors.
Other Corporate Taxes in Saudi Arabia
Zakat
● Levied on companies owned by Saudi or GCC citizens
● Calculated at 2.5% of the Zakat base, reflecting the company’s net worth
Withholding Tax (WHT)
● Applies to payments to non-resident entities, such as royalties, dividends, and service fees
● Rates vary depending on the type of payment and applicable tax treaties
Other Possible Levies
● The real estate transaction tax imposes a 5% tax on sales for speculative purposes.
● Certain sector-specific fees
Understanding these taxes ensures that businesses remain compliant and avoid penalties.
Zakat vs. Corporate Tax: Understanding the Dual System
Saudi Arabia operates a dual system: zakat for Saudi/GCC shareholders and corporate tax for foreign shareholders.
● Zakat: 2.5% of the Zakat base, focused on net assets and equity
● Corporate Tax: 20% of net adjusted profits, plus special rates for hydrocarbons
Businesses with mixed ownership need careful calculation to avoid underpayment and fines.
Registering for Tax in Saudi Arabia: Step-by-Step
Incorporate your business and obtain a commercial registration (CR)
Obtain a Tax Identification Number (TIN) from ZATCA
Register for applicable tax regimes: corporate tax, zakat, WHT, VAT
Set up accounting systems to track taxable profits and levies
GOFICO assists investors in completing each step efficiently, reducing bureaucratic delays and ensuring regulatory compliance.
Tax Filing & Compliance Requirements
● Tax Year: Usually aligned with the Gregorian calendar
● Corporate Tax Returns: Must report net adjusted profits and taxes
● Quarterly Advance Payments: Required for certain high-revenue companies
Corporate Tax Deadlines (2026)
● File corporate tax returns within 120 days after year-end
● Submit audited financial statements along with the return
● Make quarterly advance payments if required
Penalties for Non-Compliance
Failing to comply with corporate tax regulations can result in:
● Financial fines and interest
● Delayed approvals and government clearances
● Possible business suspension or license revocation
Proactive compliance is critical for risk management.
Profit Repatriation Rules in 2026
Foreign investors can repatriate profits after paying corporate tax and zakat. Proper planning ensures that transfers comply with ZATCA regulations and bank requirements.
Estimated Cost Range to Open a Company in Saudi Arabia
Depending on your business type:
● LLC Setup: ~USD 4,800
● Foreign Investment Setup: ~USD 16,000
● Joint Stock Company Setup: ~USD 16,500
● Foreign Company Branch Setup: ~USD 15,580
These estimates typically include trade license, PRO, bank account, and visa services.
Benefits of Partnering with GOFICO
Investing in Saudi Arabia can be complex, but GOFICO simplifies the process and aligns your business with Saudi Vision 2030 goals, supporting foreign investors while fostering economic diversification.
● Expertise in Saudi regulations: MISA, ZATCA, GOSI, Qiwa, Absher, NAFATH
● Integrated solutions: Corporate tax, zakat, PRO services, banking, accounting, payroll, compliance, and interim GM
● Risk mitigation: Prevent fines, optimize tax treatment, and maintain regulatory compliance
● Time-saving: Handle bureaucracy, filings, and approvals efficiently
● Support for foreign investors: Step-by-step guidance for smooth market entry
By combining Vision 2030 opportunities with comprehensive compliance support, GOFICO acts as a trusted partner to allow investors to confidently navigate the Kingdom’s tax landscape and operational challenges while focusing on growth.
Conclusion
Corporate tax in Saudi Arabia is a vital consideration for any investor, particularly foreign companies and mixed-ownership entities.
Understanding tax obligations, rates, filing requirements, and dual taxation with zakat is crucial for successful market entry and operations.
Partnering with GOFICO ensures your business remains fully compliant while benefiting from end-to-end services, expert guidance, and operational support.
By leveraging GOFICO’s expertise, investors can confidently navigate Saudi tax laws, optimize financial planning, and focus on growth from day one.
Contact GOFICO today to streamline your corporate tax compliance.
Yes, foreign-owned companies pay corporate tax, while Saudi/GCC-owned entities pay zakat.
The standard rate is 20%, with higher rates (50–85%) for oil and hydrocarbon sectors.
Yes, under the current Saudi foreign investment regulations, foreign investors can own 100% of many business types.
No, corporate tax applies to foreign-owned entities, while Saudi/GCC investors pay zakat.