Saudi Arabia's 20% Corporate Tax on Foreign Ownership

Businesses operating in Saudi Arabia continue to face a 20% corporate income tax applied to the portion of adjusted taxable income attributable to non-Saudi and non-GCC ownership in a Saudi resident capital company. The standard rate and the foreign-ownership allocation remain in effect for 2026.

For companies with mixed ownership, the non-Saudi/non-GCC ownership percentage is applied to the taxable income, while the share attributable to Saudi and GCC owners is generally included in the zakat base instead. A company that is wholly foreign-owned is generally subject to the 20% tax on its full adjusted taxable income.

The tax is calculated on Saudi-source taxable income after permitted deductions under the Income Tax Law. The same 20% rate also applies to non-Saudi resident individuals who conduct business in the Kingdom, as well as to non-residents operating through a Saudi permanent establishment.

Special cases and exclusions

Non-Saudi holdings in Saudi-listed companies may be excluded from this income-tax treatment under the applicable rules, though the exact treatment depends on the company and its activity. Separately, oil and hydrocarbon activities are governed by special rates and rules, so the standard 20% rate is not universally applicable.

Filing and payment are handled through ZATCA's electronic tax services. There is no separate government fee for the 20% tax itself; the amount payable is determined by the company's taxable income and ownership allocation. The tax applies for each financial year and is not a visa, license, or fixed-term permit.

For residents and investors in Riyadh, Jeddah, and beyond, understanding how ownership structure affects the split between corporate tax and zakat is essential when planning a business or restructuring an existing one in the Kingdom.

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