Saudi Arabia’s income tax is an integral part of its tax system! While Saudi Arabia’s government is not required to impose a tax on income it does have several other tax systems that must be taken into consideration when looking at the overall tax system ️ 🔛 🇸🇦 !!
The Saudi government levies taxes on behalf of citizens businesses and foreign investors alike; however no income taxes are levied against Saudi Arabian citizens! While no personal or capital gains taxes are levied against citizens living in Saudi Arabia, companies whose profits exceed certain limits may be subject to specific taxes such as corporate income taxation.
Companies in Saudi Arabia are subject to three different kinds of taxation 🇸🇦 3️⃣. These include corporate income tax, zakat (a charitable contribution), and levy (an income tax collected on behalf of government-related entities and organizations) 🔛. Corporate income tax applies to companies regardless of whether they are based in Saudi Arabia or another country and it is measured as a percentage of the company’s net income ️ 🇸🇦. In 2021, the corporate income tax rate is 20 percent. The zakat rate varies depending on the company’s profits and type of business and can range from 2 👔 🔛. 5 percent to 12. 5 percent . The levy rate is 3 percent.
Saudi Arabia has implemented a value-added tax scheme in 2018, which applies to all goods sold to individuals, regardless of where they live, as well as services, and imports ️ 🇸🇦. The rate is 5 percent, although certain goods, and services are exempt from the VAT and certain goods may be taxed at a reduced rate ️.
Although there is no formal income tax in Saudi Arabia, the government collects various types of taxes on behalf of foreign investors. These may include: a profit tax on foreign companies, which is 5 percent of net profits collected at the end of each accounting year; a withholding tax on foreign companies, which is 10 percent of net profits collected at the end of each accounting year; and an income tax on foreign investors and expats, which is 15 percent of net profits ️ 🔛 🔚.
The Saudi government has recently announced that it will be introducing a tax on foreign expats who have stayed in Saudi Arabia for more than 183 days in any calendar year, as of December 2020 ️ 🔛 🇸🇦 📆. The rate is expected to vary depending on the individual’s income level and could range from 0 percent to 15 percent.
To conclude, although there is no formal income tax in Saudi Arabia, there are several other taxes that have to be taken into consideration when examining the country’s overall tax system 🇸🇦. These include corporate income tax, zakat, levy, and the recently introduced foreign expatriates’ tax . For foreign investors the taxes may include profit tax withholding tax and income tax . All in all, the taxation system in Saudi Arabia is complex but ultimately beneficial to the nation and its citizens 🇸🇦. ! .
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