Thinking beyond borders
According to Saudi tax law (effective from July 30, 2004) resident capital companies (on non-Saudi/GCC shareholders’ share) and non-residents who have business activities in the Kingdom through a permanent establishment, are subject to corporate income tax in Saudi Arabia at a rate of 20%. A company will be considered a resident company if it is formed under the Saudi Companies Regulations, or if its central control and management is situated within the Kingdom.
Income subject to tax is the gross amount of income and includes income, profits, gains of any type and any form of payment arising from carrying out activity. Gross income includes capital gains and incidental income but excludes certain exempt income.
there is a 20% corporate income tax rate in Saudi Arabia.
Non resients receiving income from Saudi source may be subject to withholding tax at rates ranging from 5% to 20% depending on the nature of the service:
|Royalties, consultancy and technical services and international telecommunication services paid to head office or an affiliated company||15%|
|Payments against services to the head office or to a related party||15%|
|Consultancy and technical services and telecommunication services (other than payments to head office or an affiliate), rent, air tickets or airfreight or sea freight,
dividends, interest on loans, insurance or re-insurance premiums
|Any other payments||15%|
|Type of employee||Pension||Unemployment||Occupational Hazardeous|
|Employer share||Employee Share||Employer share||Employee share||Employer share||Employee share|
|Non Saudi Citizen||N/A||N/A||N/A||N/A||2%||N/A|
*Pension, unemployment and occupational hazardeuos contribuitons are calculated as a percentage of basic salary and housing allowance.
Only self employed individuals are subject to income tax in Saudi Arabia.
Taxpayers are required to register with the Tax Authorites and open tax file:
Individuals are required to obtain work permits to be able to work in Saudi Arabia.
Double Tax Treaties To Which Saudi Arabia is a Party, Currently In Force
|Treaty Country||Effective Date||Treaty Country||Effective Date|
|China (PRC)||01-Jan-07||South Africa||01-Jan-09|
There are currently no indirect taxes except for custom duties on certain imports which is levied at rates ranging from 5% to 20%.
There are currently no formal transfer pricing rules in Saudi Arabia. However, the Saudi Tax Authorities are in the process of introducing transfer pricing regulations that are in line with the current international rules.
Natural and corporate persons, including governmental bodies, are required to provide the tax authorities with information regarding service and supply contracts and any amendments to these contracts that are concluded with any person from the private sector within a period not exceeding 3 months from the date of signing the contract.
Currently there are no exchange controls in Saudi Arabia.