What is Saudi corporate income tax?
Published
Corporate income tax in the Kingdom applies to the non-Saudi, non-GCC ownership share in businesses. The general rate is 20% on taxable net income (after statutory allowable deductions). Specific sectors have special regimes (oil and gas at known higher statutory rates).
The core rule: by ownership, not nationality of management
A business with Saudi/foreign partnership (60% Saudi, 40% foreign):
Saudi share 60% ← zakat on 60% of the baseForeign share 40% ← corporate income tax at 20% on 40% of taxable income
Both are filed on the same entity through the ZATCA portal, with each share treated under its own regime.
What is deducted from taxable income
- Expenses related to earning the income, within the rules.
- Depreciation at statutorily approved rates (not necessarily equal to accounting rates - see the depreciation page).
- Bad debts meeting the conditions.
- Contributions and donations within caps.
Items not deducted or capped: personal expenses, penalties, statutorily disallowed gifts, and other specified items.
Filing
- An annual return with ZATCA through its portal.
- Built on the financial statements, then adjusted with tax reconciliations.
- Advance payments may be required from some taxpayers per the authority's rules.
Frequently asked questions
My business is 100% Saudi-owned - does it pay corporate income tax?
No - it pays zakat only. Corporate income tax attaches to non-Saudi/GCC ownership.
A branch of a foreign company in Saudi Arabia?
Treated as a permanent establishment subject to income tax on its profits in the Kingdom.
Can a double tax treaty apply?
Yes, between Saudi Arabia and the investor's country - treaties may reduce withholding on certain payments (see the withholding tax page) and may affect the treatment of permanent establishment profits.