Business Taxes in Saudi Arabia: VAT, Zakat, CIT

Businesses operating in Saudi Arabia are subject to three main taxes — value-added tax (VAT), Zakat, and corporate income tax — all administered by the Zakat, Tax and Customs Authority (ZATCA). Here is what companies and entrepreneurs need to know in 2026.

Value-added tax (VAT)

The standard VAT rate on taxable supplies and imports is 15%, unchanged since it rose from 5% on 1 July 2020. VAT-registered businesses must charge 15% on taxable goods and services, while being able to deduct input VAT under the rules. Some supplies are zero-rated or exempt, including certain exports, selected financial services, and qualifying health and education supplies under specific conditions.

Registration is mandatory for businesses whose annual taxable supplies exceed SAR 375,000, while smaller businesses below that threshold may register voluntarily. E-invoicing ("Fatoora") integration is mandatory under Wave 24 for businesses that exceeded SAR 375,000 in taxable VAT revenues in any of 2022, 2023, or 2024 — regardless of current revenue. VAT returns are filed monthly or quarterly depending on turnover, with higher-turnover taxpayers generally filing monthly. Due dates are set through ZATCA's electronic portal, and late payment triggers penalties.

Corporate income tax

The standard corporate income tax rate is 20% on net taxable income, applying to the share of profits owned by foreign (non-Saudi, non-GCC) shareholders. Wholly foreign-owned companies pay 20% on their taxable income. Oil and hydrocarbon producers face tiered rates based on capital investment: 85% for investments up to USD 60 billion, 75% for USD 60–80 billion, 65% for USD 80–100 billion, and 50% above USD 100 billion.

Corporate income tax returns and payments are generally due within four months after the end of the financial year. Understanding these obligations early helps residents, expats, and business owners stay compliant and avoid penalties.

---

Stay updated with the latest news, events, sports updates, business insights, real estate and lifestyle stories on Saudi Living — the leading online platform for residents, expats, and visitors in Saudi Arabia.

Follow Saudi Living for daily updates:

• Instagram - @saudiliving
• X - @saudiliving
• Facebook - @saudiliving
• YouTube - @saudiliving