Connect with BNC Global to Shape the Next Wave of Innovation in Saudi Arabia

At BNC Global, we empower businesses to drive digital transformation, innovation, and market expansion across Saudi Arabia. With expertise in accounting, risk consulting, ESG strategies, cyber security, and compliance, we help organizations navigate today’s complex business landscape with confidence.

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Why Work with BNC Global?

Empowering Strategic Growth:

Our partnerships are crafted for sustainable success — helping you expand into new markets, foster innovation, and upskill your teams for the future.

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Our partnerships are crafted for sustainable success — helping you expand into new markets, foster innovation, and upskill your teams for the future.

BNC Global Innovation & Expansion Programs

Types of Partnerships:

Taxation Laws in Saudi Arabia

Basic ⮞

Residency Status in Saudi Arabia ⮞

Types of Income ⮞

Types of Tax in Saudi Arabia ⮞

Types of VAT ⮞

Connect with us ⮞

Tax Year

The tax year in Saudi Arabia is usually the same as the calendar year, running from January 1st to December 31st.

Tax Residency

Individuals are considered tax residents in Saudi Arabia if they meet certain criteria, including staying in the country for at least 183 days in a tax year or having a permanent home in Saudi Arabia. Tax residents are subject to tax on their worldwide income.

Permanent Establishment (PE)

Foreign companies conducting business activities in Saudi Arabia may be subject to corporate income tax if they have a permanent establishment in the country. A permanent establishment is generally a fixed place of business, such as an office, branch, or factory.

Tax Treaties

Saudi Arabia has signed tax treaties with various countries to avoid double taxation and provide relief to taxpayers. These treaties govern how the tax liabilities of individuals and companies are treated when they have cross-border activities.

1. Income Tax: Individuals in Saudi Arabia are not subject to personal income tax on their earned income. This is one of the significant attractions for expatriates working in the country.

2. Corporate Tax: Companies operating in Saudi Arabia are subject to corporate income tax. The standard corporate income tax rate is 20% for both local and foreign-owned companies. However, certain industries and activities may have different tax rates or tax exemptions.

3. Withholding Tax: Saudi Arabia imposes withholding tax on certain types of payments made to non-resident companies and individuals. For example, dividends, interest, royalties, and fees for technical services may be subject to withholding tax.

4. Value Added Tax (VAT): In January 2018, Saudi Arabia introduced a 5% VAT on the supply of goods and services. VAT is applicable to most goods and services, except for essential items like basic food items, certain healthcare services, and financial services.

5. Other Taxes: There are other taxes, fees, and contributions that businesses might have to pay, such as social insurance contributions for Saudi and expatriate employees.

6. Import and Export Duties: Saudi Arabia levies customs duties on certain imported goods, and the rates can vary based on the type of goods and their country of origin.

Residency status in Saudi Arabia can be broadly categorized into two main types

Saudi Citizens

Saudi citizens are individuals who hold Saudi Arabian nationality. They have full rights and privileges in the country, including the right to live and work in Saudi Arabia without any time restrictions.

Iqama (Residency Permit)

Expatriates need to obtain an Iqama, which is a residency permit issued by the Saudi government. The Iqama is usually tied to a specific job and employer. It grants them the legal right to live and work in the country.

Renewal and Cancellation

Iqamas typically need to be renewed annually. Failure to renew the Iqama on time or violation of Saudi laws

may lead to penalties, fines, or even deportation.

Changing Employers

Expatriates who wish to change employers within Saudi Arabia need to go through a process called the "transfer of sponsorship" or "transfer of services," which requires approval from the current sponsor and the new employer.

Expatriates

Expatriates, also known as non-Saudi residents or foreign residents, are individuals from other countries who come to Saudi Arabia for employment, business, or other purposes. Expatriates must obtain a valid residency permit (Iqama) to legally reside and work in the country.

Sponsorship System (Kafala)

The sponsorship system, known as Kafala, is an essential aspect of the expatriate residency process. Under this system, expatriates must have a Saudi sponsor (usually their employer) who takes legal responsibility for them during their stay in the country. The sponsor facilitates the issuance and renewal of the Iqama and handles other related administrative matters.

Dependents' Visas

Expatriates with valid Iqamas may apply for residency visas for their immediate family members (spouse, children, parents) to join them in Saudi Arabia. These visas are typically sponsored by the main expatriate.

Permanent Residency

In recent years, Saudi Arabia has introduced a premium residency program, also known as the "Green Card" or

"Special Privilege Iqama." This program allows certain eligible expatriates to obtain permanent residency in

the country without the need for a Saudi sponsor. It grants them various benefits and privileges.

As of September 2021, Saudi Arabia does not levy personal income tax, making it an appealing destination for expatriates and individuals seeking to work and live in the country without the burden of individual income tax.

However, other taxes such as VAT, corporate income tax, withholding tax, and excise tax apply in Saudi Arabia. The standard corporate income tax rate is 20%, and VAT is imposed at a flat rate of 5% on most goods and services.

Types of Income

Other Income includes miscellaneous income sources that may include prizes, awards, lottery winnings, or any other income not specifically categorized under the above types.