Business Taxes in Saudi Arabia: VAT, Zakat, Income Tax

Businesses operating in Saudi Arabia are governed by three main levies in 2026: value-added tax (VAT), Zakat, and corporate income tax. Understanding how each applies helps owners, investors, and expatriate entrepreneurs stay compliant and plan their finances with confidence.

VAT is charged at a standard rate of 15% on most taxable goods and services across the Kingdom. Registration for VAT is mandatory for businesses with annual taxable supplies above SAR 375,000, while voluntary registration is available for those with supplies above SAR 187,500.

Zakat and corporate income tax depend on ownership. Zakat is calculated at 2.5% on the Zakat base for the Saudi and GCC-owned share of a business. Corporate income tax applies at 20% on the foreign or non-GCC-owned share of taxable profits.

For companies with mixed ownership, the tax treatment is split: the portion held by Saudi or GCC nationals is subject to Zakat, while the foreign-owned portion is subject to corporate income tax. This structure is common for joint ventures and foreign-invested firms operating locally.

How to file and pay

VAT returns and corporate income tax payments are handled through the online services of the Zakat, Tax and Customs Authority. Payments are then settled through SADAD invoices generated by the authority, giving businesses a straightforward digital process for meeting their obligations.

As of 2026, the core rates remain in force — 15% VAT, 2.5% Zakat, and 20% corporate income tax — with no change to these figures identified. For the community, knowing these thresholds and rates matters because they shape pricing, registration decisions, and the cost of doing business in the Kingdom.

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