Business Taxes in Saudi Arabia: VAT, Zakat & CIT

Businesses operating in Saudi Arabia deal with three main forms of taxation in 2026: value added tax (VAT), Zakat, and corporate income tax. All are administered by the Zakat, Tax and Customs Authority (ZATCA), with registration, filing and payment handled electronically through the ZATCA portal, the FATOORA platform for e-invoicing, and identity verification linked to توكلنا where required.

VAT is charged at a standard rate of 15% on most goods and services, unchanged since it rose from 5% on 1 July 2020. Registration is mandatory when annual taxable supplies reach SAR 375,000 or more, and optional for businesses between SAR 187,500 and SAR 374,999. Companies below SAR 187,500 are not required to register. Returns are filed monthly for businesses earning over SAR 40 million a year, and quarterly for smaller ones, with payments made through Saudi banks via SADAD.

Input VAT can be offset against output VAT on taxable and zero-rated supplies. Exports, international transport, the first sale of newly built homes, and qualifying education and healthcare are zero-rated, while most financial services, residential rent and life insurance are exempt.

Zakat applies to Saudi and GCC national shareholders and the entities they own, at a rate of 2.5% of the Zakat base, calculated broadly from net equity and assessable wealth after allowed deductions. Fully Saudi or GCC-owned companies pay Zakat only. In mixed-ownership firms, the Saudi/GCC share pays 2.5% Zakat while the foreign share pays 20% corporate income tax on its portion of taxable income.

Corporate income tax is levied at 20% on net taxable income from Saudi-source activities. All three obligations are managed through the same ZATCA online account, giving business owners a single point for VAT, Zakat and CIT filings — a practical detail for the many residents and expat entrepreneurs running companies across الرياض and جدة.

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