Taxes in Saudi Arabia
One of the most rewarding things about relocating to Saudi Arabia used to be its tax-free society. Find out exactly how that has been changed and how it will benefit you.
The simplified version of what 'tax-free' really looks like is basically not being taxed or not paying taxes at all. Until recently, that was the advantageous reality for many expats in Saudi Arabia. However, as of 2018, the Value Added Tax was introduced. Read our VAT in Saudi Arabia article to learn more about it.
Saudi Arabia has been the ideal destination to work, save money, and enjoy a nice work-life balance. With little to no taxes, many expats find it a perfect place to really begin putting some savings away for future plans.
In short, foreigners working in Saudi Arabia are exempt from income tax, property tax, VAT, vehicle tax, inheritance or gift tax, license fees, etc., which are quite widespread in many western countries.
Important:
Depending on your home country, you may be charged double taxation. Check the tax agreements between your country of origin and the Kingdom, on the General Authority of Zakat and Taxes page.
Zakat
As one of the five pillars of Islam, Zakat is regarded as very important obligation for every Muslim - to donate each year a certain amount of their profits as a religious alms. In Saudi Arabia, Zakat is applied to businesses and companies, as well. It could be assessed on commercial goods, properties and other financial belongings
Goods tax in Saudi Arabia
As of January 1, 2018, the first time ever VAT was applied to all goods and services in Saudi Arabia. The value-added tax (VAT) is 5%.
Goods import in Saudi Arabia
The standard import limit is 3,000 Saudi Riyals worth of personal and products that can be imported without tax. Anything exceeding this will be charged a minimal tax, and the freight or travel company used will issue this.
Good to know:
If you clearly state that the goods are personal and not for commercial use, the tax will often be voided.
Just to be sure check with your moving/freight company for the usual practices regarding taxes.
Corporate tax in Saudi Arabia
A 20% tax rate applies to foreign companies, which are paid by the non-Saudi owner or liable shareholders. Depending on the type of business, tax rates may differ across sectors.
Important:
You are required to settle these tax fees within 10 days following receipt of the company tax return form.
Expat employee tax in Saudi Arabia
An additional tax has been introduced in 2018 that applies to foreign employees working in a company. A tax of 400 SAR per employee per month has been introduced this year. This hefty tax is paid yearly, and government authorities will stall all business activities until delayed payment is made. Owners of the company should pay the tax, but smaller business has passed down the fee to the employee.
The 400 Sar tax is said to increase yearly, making it very costly to employ foreign expats in smaller and medium-sized business.
Important:
You are required to settle these tax fees within 10 days following receipt of the company tax return form.
Sin taxes
Since 2017, Saudi Arabia is implementing 100 % excise taxes on tobacco products and energy drinks, as per the decision made by the Gulf Cooperation Council.
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