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Tax System in Saudi The Complete Guide to Hijra and Emigrating to Muslim Countries MakeHijra

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Saudi Tax

Currently Saudi Arabian income tax is not applicable to expatriate workers. Saudi Arabian citizens pay a religious tax (zakat) which is 2½% of the individual’s net worth. There are no statutory deductions from the employee’s wages, except for pension contributions in the amount of 5% for employees of Saudi Arabian nationality only. Profits accruing to foreign investors are subject to income tax, which is regulated under the Income Tax Regulation, Royal Decree No. M/1 of 15th Muharram 1425 Hejra corresponding to 7th March 2004 Gregorian. Most types of business are taxed at a flat rate of 20% of profits. Net operating losses may be carried forward from one year to the next. The loss which has been carried forward may be deducted from the tax base of future taxable years until the cumulative loss is fully offset.

Payments to a non-resident with no permanent establishment in Saudi Arabia for any amount realized from a source in the Kingdom are subject to withholding tax at the following percentages of the gross payment:

Type of paymentRate
01Management fees20%
02Royalties or proceeds; payments for services to a headoffice or related company 15%
03 Payments for rent; payments for technical and consulting services; payments for air tickets, air freight and maritime freight; payments for international telecommunications services; dividends; loan charges; insurance or reinsurance premiums 5%
04Other Payments15%

Saudi Ministry of Finance

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