Question 1

Do I pay Zakat or corporate income tax in Saudi Arabia?

Accepted Answer

It depends on ownership. Saudi and GCC shareholders are subject to Zakat at 2.5% of the Zakat base. Non-GCC foreign shareholders are subject to corporate income tax at 20% of taxable profit. Mixed-ownership companies apportion between the two and file a single return with ZATCA.

Question 2

When are Zakat and corporate income tax returns due in Saudi Arabia?

Accepted Answer

Returns are due within 120 days of the financial year end. For a 31 December year end that falls on 30 April. The liability must be settled by the same date, and late filing and late payment attract separate penalties, so an extension does not defer payment.

Question 3

Who must prepare transfer pricing documentation in Saudi Arabia?

Accepted Answer

Taxpayers whose related-party transactions exceed the threshold in the Transfer Pricing Bylaws must file a disclosure form with the annual return and maintain a local file and a master file. Zakat payers were brought into scope by the 2024 amendments. Country-by-country reporting applies to large multinational groups.

Question 4

What is the VAT rate in Saudi Arabia?

Accepted Answer

The standard rate is 15%, raised from 5% in July 2020. Exports, international transport and qualifying medicines are zero-rated, while most financial services and residential leases are exempt. Registration becomes mandatory once taxable supplies pass the statutory threshold.

Question 5

What tax relief does the Saudi Regional Headquarters (RHQ) programme give?

Accepted Answer

Companies licensed by the Ministry of Investment to run a Regional Headquarters in the Kingdom receive a 30-year package: 0% corporate income tax and 0% withholding tax on approved RHQ activities. Relief depends on meeting economic substance and qualifying-activity conditions on an ongoing basis.

Question 6

What is ZATCA e-invoicing (FATOORAH)?

Accepted Answer

FATOORAH is the Kingdom's mandatory e-invoicing regime. Phase One required electronic generation of invoices from December 2021. Phase Two requires integration with the ZATCA platform for clearance and reporting, rolled out in waves by taxpayer revenue, with each wave notified at least six months ahead.

Question 7

When does a foreign company create a permanent establishment in Saudi Arabia?

Accepted Answer

A permanent establishment can arise from a fixed place of business, a building or construction site, or a dependent agent concluding contracts in the Kingdom. A service PE can arise where personnel are present beyond a threshold period. An applicable double tax treaty may modify the domestic test.

Question 8

How do I object to a ZATCA assessment?

Accepted Answer

An objection must be filed with ZATCA within 60 days of the assessment notice. If it is not resolved, the matter escalates to the General Secretariat of Tax Committees and then the Appeal Committee. The deadlines are strict and a missed date generally forfeits the right to object.

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