Tax Figures
Corporate Income Tax
20% of net adjusted profits.
Tax filings are based on the fiscal year of the company and the tax return is due within 120 days of the fiscal year end. Tax returns are submitted to the Department of Zakat and Income Tax (DZIT). If a Saudi citizen has any ownership stake the company must also file audited financial statements with the tax return.
Corporate tax is paid quarterly based on previous years estimates (assuming total annual tax payment is greater than SAR 500,000) and the final tax installment is due within 120 days of the companies fiscal year end.
Income Tax Rate
0-∞: 0%
Employment income and allowances, including education allowances, received by expatriates is not subject to tax in Saudi Arabia.
Payroll Tax
N/A
Sales Tax
N/A
Withholding Tax
Withholding Tax is applied to payments to a non-resident party.
- Dividend WHT 5%
- Interest WHT 5%
- Royalty WHT 15%
These figures can be reduced by treaty agreements. Withholding Tax is payable within 10 days of the month following the initial payment.
Other Tax
N/A
Time to prepare and Pay Taxes
67 hours
Employers Social Security and statutory contributions
GOSI – employers social security is calculated on a monthly basis. The rate is 2% for expats and 12% for Saudi nationals.
It is assessed based on the total monthly remuneration in the following categories (subject to an upper limit of SAR 45,000 per month).
- Basic wage
- Housing allowance
- Commission payments
Saudisation requirements may apply for employers where less than 50% of employees are Saudi nationals.
Employees Social Security and statutory contributions
GOSI of 10% applies to Saudi nationals.
There is no GOSI or employees social security for foreign nationals.
Payroll
There are specific rules for payroll and taxation in Saudi Arabia, depending upon the type of company structure chosen. The primary concerns for a foreign company that needs to comply with tax laws in Saudi Arabia are: individual income tax, social security costs, payroll tax, sales tax, withholding tax, business (Zakat) wealth tax and permanent establishment concerns.
Remote Payroll
A remote payroll in Saudi Arabia is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Saudi Arabia. One option for a non-resident company to payroll its employees (local and foreign) in Saudi Arabia is to use a fully outsourced service like a GEO which will employ and payroll the staff on their behalf.
Local Payroll Administration
In some cases, a company will register their business in Saudi Arabia under one of the forms available, but might prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. The payroll calculations, payments and filings can however, all be outsourced to the payroll provider.
Internal Payroll
Larger companies with a commitment to Saudi Arabia may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who possess the relevant background necessary to manage a Saudi Arabian payroll, and can also fulfill all tax, withholding, and payroll requirements.
This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Saudi Arabian employment laws.
Currency
SAR – Saudi Arabian Riyal
It is fixed to the USD at the rate of USD 1 = SAR 3.75
