Similar to Qatar and Dubai, Saudi Arabia taxes its investors only if their profits are earned from activities within the emirate. These activities could be generated directly by a Company, a Permanent Establishment of an overseas parent or a Joint Stock Company. In this instance taxation rate will depend on the origin of these investors; if they are non Saudi tax residents then the corporation tax rate is 20% whilst the local Saudi businesspersons are taxed based on the Zakat (which is an islamic assessment for tax purposes).
In the event that a company is owned by both Saudi and non Saudi shareholders the profits are apportioned accordingly and taxed separately.
Applicable Taxes
- Zero Tax if income is derived outside the emirate of Saudi Arabia
- Taxable Income within the Saudi Arabia: 20% Corporation Tax or for locals 2.5% Zakat (religious tax)
- Disposal of Shares - taxed at 20%
- Non Saudi employees Social Securities Tax is 2% whilst for Saudi employees is higher at 12% (10% relates to housing allowance - capped at SAR 45,000)
Local Tax Office
The local tax office is called "The Zakat, Tax and Customs Authority" and it is a modern and digitalised department.
Tax Payers and Tax Consultants can use the online platform offered for various tasks including:
- Tax Rulings
- VAT Returns
- Customs
- Real Estate Tax
- Withholding Tax
- Excise Tax
Modern Approach
The taxpayer and the service providers can obtain from the income tax office electronically several information including:
- Tax Returns (submissions and review)
- Amendments of tax information
- File on line objections
- Requests for certificates
- Request for rulings
- Many more
E- Invoicing for everyone!
The emirate has introduced the e invoicing service where effectively all sales invoices are registered centrally. Applicable date is 1st of January 2023
The use of a sophisticated electronic solution is mandatory and via this approach all sales invoices are appropriately raised, recorded and addressed.
Double Tax Treaty Network
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