Saudi Arabia Tax Laws and Regulations

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Saudi Arabia Tax Laws

Bradford Jacobs has more than 20 years’ experience among leading payroll providers worldwide, and we ensure our clients comply with every aspect of legislation wherever they operate. Our local ‘know-how’ plus international expertise is essential for international companies expanding into Saudi Arabia and further afield throughout the Middle East and West Asia.

There are compelling reasons for companies to move into Saudi Arabia. The economy is built around oil – Saudi Arabia has 15% of the world’s known reserves and is the largest global exporter of crude oil. Away from the oil fields, the Saudi government encourages diversification and is licensing major multinationals as it seeks to rival the United Arab Emirates as the region’s leading business hub.

These advantages must be balanced against the challenges of dealing with payroll and employment regulations for your staff.  Handling these issues from overseas always poses complications that demand top-rated guidance.

Overview of Taxes in Saudi Arabia

* Saudi Arabia uses the riyal (SAR) as its currency.

Personal Income Tax (PIT): There is no personal income tax in Saudi Arabia on Saudi-sourced income, removing the need for registration, reporting, residence qualifications or filing, except for the elf-employed.

Social Insurance Taxes: These apply to Saudi citizens, not expats. Employees contribute 10% of their basic monthly salary; employers the equivalent of 12% of payroll to the General Organization for Social Insurance. Non-Saudi citizens contribute 2% to occupational hazard insurance. Citizens from the other five Gulf Cooperation Council (GCC) nations, Bahrain, Kuwait, Oman, United Arab Emirates and Qatar are treated as Saudis.

Corporate Income Tax: The headline rate is 20% on net profits, with non-Saudi companies and investors liable for tax on profits sourced in the country.

Value Added Tax (VAT): The standard rate on goods and services has been 15% since July 1, 2020, an increase from 5%. Exemptions include some financial and insurance services, plus health and education services for Saudi citizens.

Saudi Individual Tax – Single, Married

There is no personal income tax in Saudi Arabia and therefore no requirement for registration, reporting or filing, except for the self-employed, who must file returns.

Employee Social Insurance Taxes: The General Organization for Social Insurance (GOSI) collects 10% from Saudi employees on the payroll, 9% going to social insurance and pension, with 1% to unemployment insurance. Expats do not contribute, except for 2% to occupational hazard insurance.