Saudi Arabia Corporate Tax | Your Complete Guide for 2026

Saudi Arabia corporate tax 2025 still follows one core rule. Foreign shares usually pay 20 percent corporate income tax and Saudi or GCC shares usually pay Zakat at 2.5 percent of the base, so ownership mix sets the bill. 

At the same time, ZATCA is consulting on new laws and global minimum tax rules. Below, see how scope and rates, withholding tax and mixed ownership calculations work so board forecasts can better match payable amounts properly for cash and audits.

Overview of Corporate Tax in Saudi Arabia

Saudi Arabia taxes corporate profits at a headline rate of 20 percent for most sectors. Zakat is calculated as 2.5% from the individual’s total eligible net worth. The calculation of it includes assets minus liabilities) that have been held for one lunar year.

Corporate tax in Saudi Arabia mainly applies to foreign investors, non-Saudi partners in resident companies and permanent establishments of non-resident firms. Zakat usually applies to Saudi and GCC individual owners and their share in local entities.

There is still no personal income tax on employment income for residents or expatriate staff, although VAT at 15 percent now touches most sales.

Who Pays Corporate Tax and Who Pays Zakat?

The Income Tax Law sets the tax base at the non-Saudi share of a resident capital company. A resident company is either formed under Saudi law or managed inside the Kingdom.

In practice, this means three common cases.

• A wholly foreign-owned company normally pays income tax at 20 percent on its adjusted profits.
• A wholly Saudi or GCC-owned entity usually pays Zakat at 2.5 percent on its Zakat base, not income tax.
• A mixed company pays both. The non-Saudi share of profit is taxed at 20 percent. The Saudi share feeds into the Zakat calculation.

Saudi Arabia Corporate Tax Rate and Special Sectors

For most activities, the Saudi Arabia corporate tax rate is a flat 20 percent on net adjusted profit. However, there are two sectors that stay outside this simple rule.

Natural gas investment

Current guidance treats investment in natural gas fields as taxable under the income tax system with sector-specific rules and rates that can reach 20 percent.

Oil and other hydrocarbons

Income linked to upstream oil and hydrocarbon production can face rates between 50 percent and 85 percent, with a fixed 50% rate for larger investments (over $100 billion), depending on capital invested and project scale.

Tax Base and Mixed Ownership: What’s the Difference?

The income tax base starts with accounting profit, then adjusts for non-deductible items, timing differences and any exempt income. Capital gains on the non-Saudi share, many service profits and most finance income feed into that base.

Zakat works differently. It looks at the Saudi ownership slice and tests the Zakat base, which can include equity, some long term liabilities and certain reserves, then strips out fixed assets and similar items. The Zakat manual issued by ZATCA gives worked examples on how to build this base.

Saudi Arabia Corporate Tax Calculation Example

Here is a simple Saudi Arabia corporate tax calculation sample for a mixed company.

• Profit before tax in the accounts: SAR 10,000,000.
• Non-Saudi ownership: 60 percent.
• Saudi ownership: 40 percent.

Step 1: Assume tax adjustments are minor. Taxable profit stays SAR 10,000,000.

Step 2: Non-Saudi share of that profit equals 60 percent of SAR 10,000,000. That is SAR 6,000,000.

Step 3: Apply 20 percent income tax. 20 percent of SAR 6,000,000 is SAR 1,200,000.

Suppose the Zakat base tied to the Saudi share works out at SAR 4,000,000 after Zakat manual adjustments. A 2.5 percent charge on SAR 4,000,000 equals SAR 100,000.

So the same company pays SAR 1,200,000 income tax and SAR 100,000 Zakat for that year.

This split has real cash flow impact. It shapes how investors think about partner mix, capital structure and locations for regional headquarters within the Kingdom.

Compliance Timeline, Returns and Withholding Tax

ZATCA expects taxpayers to register, file returns and pay on time using its online portal. Implementing regulations confirm that resident capital companies must keep Arabic accounting records and follow the income tax rules for non-Saudi shares.

Return filing

Taxpayers that fall in the income tax net must file annual returns, often within 120 days after year end. Zakat and tax procedure drafts seek to tighten deadlines and clarify appeal rights.

Withholding tax 

Payments to non-residents for services, interest, dividends or royalties can face withholding at rates between 5 percent and 20 percent depending on category and, under some draft changes, on the counterparty’s jurisdiction.

Tax amnesty episodes

Recent amnesty windows gave relief on penalties for taxpayers who corrected past positions. These windows do not stay open forever, so 2025 filings should assume a stricter line.

Draft Law Changes and Global Minimum Tax

Saudi Arabia is not standing still. Drafts of a new Income Tax Law and a new Zakat and Tax Procedures Law were released for public consultation. They aim to align more closely with global practice, refine withholding rules and modernise dispute processes.

At the same time, the Kingdom has signed up to the OECD’s Pillar Two framework. This introduces a 15 percent global minimum effective tax rate for very large multinational groups, with revenue above EUR 750 million.

A separate incentive regime now gives qualifying regional headquarters a zero percent income tax rate on some eligible income, plus relief on withholding tax for certain payments, yet those incentives still stay inside broader Zakat and VAT rules.

Finance teams that wait for the final text of new laws risk short planning time. It is safer to test scenarios now and treat 2025 as a transition year.

How Arnifi Supports Saudi Corporate Tax Planning?

Arnifi helps investors keep Saudi Arabia corporate tax 2025 rules in one clear map instead of scattered emails and spreadsheets. The team can link ownership mix with Zakat and corporate tax in Saudi Arabia inside simple models, then test rate and cash scenarios for new deals. Arnifi also prepares question packs for local tax agents so board time in Riyadh or Dubai stays focused on choices, not basic explanations.

Final Thoughts

Saudi Arabia corporate tax 2025 keeps the 20 percent headline rate for most sectors while new laws move through consultation. Boards that plan early around the structure and Zakat base feel less pressure when audits arrive. Arnifi can sit beside finance teams, build practical models and keep work with Saudi advisers sharp so tax exposure stays planned, not reactive.

FAQs

What is the standard corporate tax rate in Saudi Arabia for 2025?

Most companies with non Saudi owners pay 20 percent corporate tax on their non Saudi share of profit. Saudi and GCC shares normally face Zakat at 2.5 percent instead.

Which companies mainly pay Zakat instead of corporate tax?

Companies owned fully by Saudi or GCC nationals usually pay Zakat at 2.5 percent on their Zakat base and do not pay corporate tax on that share.

Are there higher corporate tax rates for oil and gas projects?

Yes. Upstream oil and hydrocarbon projects can face rates between 50 percent and 85 percent. Natural gas projects follow separate rules that can lead to higher effective rates than 20 percent.

How does withholding tax work in Saudi Arabia?

It may need to deduct withholding tax at rates between 5 percent and 20 percent and pay ZATCA when a Saudi company pays non residents for services or royalties.

What should finance teams watch for in 2025 and beyond?Teams should track the new Income Tax Law and the new Zakat and Tax Procedures Law. They should also watch any Saudi steps on the 15 percent global minimum tax.