Quick tax overview

• Saudi / GCC nationals (and fully Saudi/GCC‑owned companies): Such entities are generally subject to Zakat in lieu of corporate income tax, at a rate of 2.5% of the Zakat base. The assessment, collection, and administration of Zakat are governed by the Zakat, Tax and Customs Authority (ZATCA).
• Non‑Saudi (foreign) investors / non‑GCC shareholders: Such entities are generally subject to Corporate Income Tax on Saudi‑source profits or on their share of profits of resident companies, at a rate of 20% on net adjusted profits, in accordance with Saudi tax regulations.
• Mixed ownership companies: For companies with mixed ownership, Zakat is applied to the share owned by Saudi or GCC shareholders, while corporate income tax is applied to the share owned by non-Saudi investors. The tax base is calculated proportionately in accordance with ZATCA rules.

Tax rates

• Corporate Income Tax: 20% on net adjusted profits for non‑Saudi (foreign) taxpayers / non‑GCC portions of resident companies.
• Zakat: 2.5% of the Zakat base for qualifying Saudi/GCC natural or legal persons. Zakat filings and calculations follow ZATCA guidance.
• Value Added Tax (VAT): standard rate 15% (increased from 5% effective 1 July 2020) — businesses must register, file, and apply transitional rules where contracts span the change.
• Withholding Tax (WHT): levied on payments to non‑residents; rates vary by payment type (common domestic rates: 5% on dividends/interest, 15% on royalties, and up to 20% for certain services or management fees depending on classification). Tax treaties may reduce rates. WHT is reported and paid through ZATCA’s electronic services.

VAT

• VAT is charged on the taxable supply of goods and services in Saudi Arabia, imports, and certain domestic transactions.
• Businesses above the mandatory registration threshold must register with ZATCA and file periodic VAT returns.
• Rate: 5% at introduction (2018) → 15% from 1 July 2020.

Withholding tax

• WHT applies when payments are made from a Saudi resident (or PE) to a non‑resident for Saudi‑sourced services or income.
• Typical categories: dividends, interest, royalties, technical / management / consultancy fees, rent, etc. Rates are varied by payment nature (from 5% to 20%).

Foreign Direct investment (FDI) in KSA

• FDI inflows reached SAR 119 billion in 2024, reflecting a 24% increase compared to SAR 96 billion in 2023.
• This growth highlights strong and sustained foreign investor confidence in the Saudi economy.
• The increase was supported by ongoing Vision 2030 reforms, regulatory improvements, and large-scale investment projects.

• From 2017 to 2024, official figures show that FDI inflows increased by more than 300%, reflecting the impact of structural reforms and market liberalization.
• 2024 recorded strong FDI inflows, estimated in the range of SAR 119 billion.

Latest Indicator – Q1 2025

• FDI inflows in Q1 2025 totalled SAR 22.2 billion.
• This represents a 44% increase compared to Q1 2024, signalling continued positive momentum at the start of 2025.
• Key Drivers Supporting FDI Growth
  • Vision 2030 economic transformation agenda
  • Improved ease of doing business and investor protection
  • Mega and giga projects across priority sectors, including:
    • Manufacturing
    • Financial services
    • Construction and infrastructure
    • Retail and logistics
    • Energy-related industries

Speaker & Firm

Dr. Waleed M. Al-Bassam
Managing Partner — KBCPA (KSA)

About KBCPA (KSA): KBCPA provides Accounting, Tax, Regulatory advisory, and Management consulting services in the kingdom of Saudi Arabia. As a JPA International member, KBCPA leverages global technical resources while delivering locally compliant solutions.