Saudi Arabia: 20% Corporate Tax on Foreign Ownership

Foreign investors and companies operating in Saudi Arabia are subject to a 20% corporate income tax on taxable income attributable to non-Saudi and non-GCC ownership in a Saudi-resident company. The framework also covers non-resident entities doing business through a permanent establishment in the Kingdom.

For a company that is 100% foreign-owned, the 20% rate generally applies to all taxable income. In mixed-ownership companies, the tax usually applies only to the share of taxable income attributable to non-Saudi and non-GCC owners. A non-resident operating through a Saudi permanent establishment is taxed at 20% on income arising from or attributed to that establishment, subject to applicable tax treaties.

Branches of foreign companies are also generally subject to the 20% rate, and branch remittances may face an additional 5% withholding tax.

Registration and deadlines

Businesses must register with the Zakat, Tax and Customs Authority (ZATCA) before the end of their first fiscal year. The income-tax return must be filed and the assessed amount paid electronically through the ZATCA portal within 120 days after the fiscal year-end, via the Returns section, completing and submitting the approved form before payment. Registration has no fixed expiry and continues until deregistration.

Late-payment penalties rise with the delay: 5% for up to 30 days, 10% beyond 30 days, 20% beyond 90 days, and 25% beyond 365 days.

Under the Investment Law effective February 2025, foreign investors generally register with the وزارة الاستثمار before beginning activity rather than obtaining the former investment license. There is no single flat fee for every registration category; the applicable fee is set by the ministry after approval. Qualifying firms in designated special economic zones may benefit from a reduced 5% corporate tax rate for up to 20 years, subject to zone conditions.

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