The income tax rates vary in the Kingdom of Saudi Arabia depending on the type of activity and the investment field.
According to Article Seven of the Income Tax Law issued on March 6, 2004, the tax rate on the tax base is 20 percent for each of the following: a resident capital company, a non-Saudi resident natural person who conducts business, and a non-resident person who conducts business in the Kingdom through a permanent establishment.
The tax rate on the tax base for investors in only the natural gas field is capped at 30 percent. For taxpayers involved in oil and hydrocarbon production, the tax rate on the tax base is 85 percent. For those operating in both oil and hydrocarbon materials and natural gas investments within the Kingdom, the total tax due is the sum of the taxes calculated on each respective tax base.
Article Sixty-Eight of the law stipulates the following withholding tax rates on payments: 5 percent for rent, 15 percent for royalty or proceeds, 20 percent for management fees, 5 percent for payments for airline tickets, air or maritime freight, 5 percent for payments for international and telecommunications services, and any other payments as determined by the executive regulations of the Income Tax Law, provided that the tax rate does not exceed 15 percent.
Article Eight of the law defines taxable activities as all types of activities, including commercial, industrial, agricultural, service, banking, insurance, and investments of various types or fields, transportation, leasing of movable and immovable, tangible and intangible property, as well as professional or craft activities, or any other similar activity aimed at making a profit, such as agencies and brokerage. This does not include the mere opening of bank accounts of various types (current, term, savings), or trading in shares of a company listed on the Capital Market by a resident individual.
According to Article Two and its amendments, the following individuals and entities are subject to income tax in the Kingdom: a resident capital company with respect to shares directly or indirectly owned by non-Saudis, and shares directly or indirectly owned by individuals engaged in the production of oil and hydrocarbons; a resident non-Saudi natural person who conducts business in the Kingdom; a nonresident who conducts business in the Kingdom through a permanent establishment; a nonresident with other taxable income from sources within the Kingdom; a person engaged in the field of natural gas investment; and a person engaged in the field of oil and hydrocarbons production.
Related quizzes
