Saudi Arabia

Saudi Arabia

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Income Tax

Liability for income tax

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.

Tax trigger points

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.

Tax rates

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:

Management fees 20%
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
5%
Any other payments 15% 

 

Social Security

Liability for social security

Type of employee Pension Unemployment Occupational Hazardeous
  Employer share Employee Share Employer share Employee share Employer share Employee share
Saudi citizen 9% 9% 1% 1% 2% N/A
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.

Employment insurance

See above.

Compliance Obligations

Employee compliance obligations

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:

  • Taxpayers are required to file annual income tax retruns within 120 days from the end of financial year
  • taxpayers may be required (upon request by the Tax Authorities) to submit financial statements audited by a Certified Public Accountant licensed in Saudi Arabia of ther activities in Saudi Arabia
  • taxpayers are required to maintain their accounting records in Arabic language
  • As an lternative for filing tax returns based on regular cocunts, taxpayers may request approval to file tax returns on deemed profit basis.  The rates of deemed profit range from 10% to 85% depending on the natureof the activities.

Employer reporting and withholding requirements

None.

Immigration

Work permit / Visa requirements

Individuals are required to obtain work permits to be able to work in Saudi Arabia.  

Other Issues

Double taxation treaties

Double Tax Treaties To Which Saudi Arabia is a Party, Currently In Force

Treaty Country Effective Date Treaty Country Effective Date
Austria  01-Jan-08 Pakistan 01-Jan-07
Belarus 01-Jan-11 Russia 01-Jan-11
China (PRC) 01-Jan-07 South Africa  01-Jan-09
France  01-Jan-81

South Korea  01-Jan-09
Greece 01-Jan-11 Spain 01-Jan-09
India 01-Jan-07 Syria  01-Jan-10
Italy 01-Jan-10 Turkey 01-Jan-10
Malaysia 01-Jan-08

United Kingdom 01-Jan-10
Netherlands 01-Jan-11 Japan 01-Jan-12
Ireland 01-Jan-13 Bangladesh 01-Jan-12
Ukraine 01-Jan-13 Malta 01-Jan-13
Poland 01-Jan-13 Romania 01-Jan-13

 

Indirect taxes

There are currently no indirect taxes except for custom duties on certain imports which is levied at rates ranging from 5% to 20%.  

Transfer pricing

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. 

Local data privacy requirements

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.

Exchange control

Currently there are no exchange controls in Saudi Arabia.

Non-deductible costs for assignees

N/A

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