How Business Tax and Zakat Work in Saudi Arabia

Oct 30, 2026•2 min read

Businesses operating in Saudi Arabia are subject to two main obligations depending on ownership: a 20% corporate income tax on foreign-owned profits, and a 2.5% Zakat charge on eligible Saudi-owned and GCC-owned assets. Understanding which applies is essential for companies and investors across the Kingdom.

Foreign-owned businesses generally pay 20% corporate income tax on their net adjusted profits. Saudi-owned and eligible Gulf-owned businesses, by contrast, pay 2.5% Zakat calculated on the Zakat base rather than a blanket charge on all assets. Mixed-ownership companies are treated proportionally: income tax applies to the foreign ownership share, while Zakat applies to the Saudi or GCC share.

Registering and filing

Foreign establishments must register for income tax with ZATCA, with a listed service target of one working day. Returns are filed through the ZATCA electronic portal: log in, select Returns, choose the relevant return, enter the financial data, and submit. Zakat returns are generally due within 120 days after the end of the Zakat year.

For a Gregorian financial year, Zakat is time-adjusted to the Hijri rate using the actual number of days, while the standard annual rate remains 2.5%. There is no single fixed riyal fee for either the income tax or Zakat — the amount depends on the taxable profit or the calculated Zakat base.

Making the payment

Assessed amounts are paid through a SADAD invoice using Saudi online banking or an ATM. The process is straightforward: the business receives the SADAD invoice, pays it, and then receives a payment notification by SMS or email.

For the many entrepreneurs, residents, and investors doing business in the Kingdom, knowing whether income tax or Zakat applies — and meeting the filing deadlines — helps avoid penalties and keeps operations compliant.

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