Business Taxes in Saudi Arabia: VAT, Zakat & CIT

Business owners and investors in Saudi Arabia continue to operate under three main tax obligations: value-added tax (VAT), zakat, and corporate income tax (CIT). Understanding which applies depends largely on ownership and business size, with the Zakat, Tax and Customs Authority (ZATCA) acting as the official authority overseeing all business tax matters in the Kingdom.

VAT is set at 15% on most goods and services. Businesses reaching SAR 375,000 in annual taxable supplies must register, while voluntary registration is available for those with supplies between SAR 187,500 and SAR 375,000. Filing is done through the ZATCA website or app, and support is available via a 24/7 unified call center on 19993, instant chat, email, and ZATCA's account on X.

Zakat vs. corporate income tax

The distinction between zakat and CIT comes down to ownership. Saudi and GCC-owned businesses pay zakat at 2.5% of the zakat base, while the foreign-owned share of taxable income is subject to CIT at 20%. For mixed-ownership companies, the two are split: the Saudi/GCC portion falls under zakat, and the foreign portion under CIT. Corporate income tax is paid in three instalments during the year, due by the end of the 6th, 9th, and 12th months.

Other points matter for the wider community: there is no personal income tax on employment income, which remains a key draw for residents and expats. However, withholding tax applies to certain cross-border payments, ranging from 5% to 20% depending on the payment type.

current rates remain unchanged in 2026: VAT stays at 15%, CIT at 20%, and zakat at 2.5%. Companies unsure of their obligations are encouraged to confirm their category and registration status directly through official ZATCA channels.

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