Saudi Arabia
Corporate tax in Saudi Arabia explained
Zakat, income tax or both? Ownership structure decides your Saudi tax profile. A clear walkthrough for foreign-owned and mixed entities.
21 May 2026 · 9 min read · By the Meridian team
Ownership determines the regime
Shares held by Saudi and GCC nationals fall under Zakat at 2.5% of the Zakat base. Shares held by non-GCC investors fall under corporate income tax at 20% of adjusted net profit. A mixed-ownership company apportions between the two according to the shareholding, which is why cap table changes have immediate tax consequences.
The Zakat base is not profit
It is a balance sheet calculation: capital, retained earnings, provisions and long-term liabilities funding non-current assets, less the net book value of deductible assets, with adjustments. A profitable year can produce a modest Zakat charge and a loss-making year can still produce a liability. Budget for it from the balance sheet, not the P&L.
Withholding tax on payments abroad
Payments to non-resident parties attract withholding tax at rates that vary by payment type — commonly 5% on dividends and technical services, 15% on royalties and payments to related parties. It is due by the tenth day of the following month, and double tax treaty relief must be claimed with documentation, not assumed.
Filing and transfer pricing
Returns are due within 120 days of the financial year end, with audited financial statements attached. Entities above the disclosure threshold must also file a transfer pricing disclosure form and maintain local and master files where they meet the revenue test.