Zakat Rules for Saudi and Mixed-Ownership Firms

Businesses owned by Saudi and GCC nationals are subject to Zakat on their Saudi/GCC ownership share, while mixed-ownership resident companies pay Zakat on the Saudi/GCC portion and income tax on the foreign portion. These obligations are a routine part of operating a company in the Kingdom and affect owners across Riyadh, Jeddah and beyond.

The standard Zakat rate is 2.5% of the Zakat base for a Hijri financial year, with an equivalent annual rate generally set at 2.578% for companies using a Gregorian financial year. Importantly, Zakat is calculated on the Zakat base rather than simply on accounting profit, so the final amount varies from one company to another. No single fixed figure or universal minimum payment is stated in the applicable rules.

Deadlines and registration

Taxpayers who keep accounting books must submit the annual Zakat return and pay the assessed amount within 120 days after the end of the Zakat year. If that deadline falls on an official holiday, it moves to the next working day. Estimated-method taxpayers generally pay after 12 months from the commercial-registration date, subject to the applicable rules. Every Zakat payer must register with the Zakat, Tax and Customs Authority before the end of its first fiscal year.

Companies wholly owned by Saudi or GCC persons generally file for the full applicable obligation, while mixed-ownership companies separate the Zakat and income-tax treatment. A company may request consolidated Zakat treatment for qualifying wholly owned subsidiaries or commonly owned companies, where approval may be required; included subsidiaries generally still submit separate information declarations.

All registration, returns, calculations, payment, objections and correspondence are handled electronically through the authority's portal, with no separate government fee specified for registration, filing or payment. The current implementing regulation applies to financial years beginning after 1 January 2024. Business owners are advised to confirm their status early to meet the 120-day window and avoid penalties, which are also administered through the authority's electronic services.

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