Corporate Income Tax Registration
As Saudi Arabia continues to reduce its dependence on oil and build a more diversified economy, tax reform has become a central part of its Vision 2030 strategy. Expanding the corporate tax base is one way in which the government is broadening non-oil revenue, improving long-term finances and bringing local rules in line with global practices.
The current tax laws draw a clear line between businesses that pay Zakat, usually those fully owned by Saudi or GCC nationals, and those that pay Corporate Income Tax (CIT), including foreign-owned companies, permanent establishments and joint ventures with mixed ownership.
The aim is to create a more transparent and consistent framework for both local and international businesses. This guide sets out who is in scope, how to register and what is required.
Who needs to register?
Corporate tax in Saudi Arabia applies to businesses with foreign ownership, including Saudi companies with foreign shareholders, and permanent establishments or branches of foreign companies. It also covers most entities licensed by the Ministry of investment (MISA), regardless of their ownership structure.
Companies owned entirely by Saudi nationals or citizens of the Gulf Cooperation Council (GCC) member states are liable for Zakat, an Islamic assessment.
Where a company is owned by both Saudi (or GCC) and non-Saudi interests, the portion of taxable income attributable to the non-Saudi investors is subject to income tax, and the Saudi share goes into the basis on which Zakat is assessed. This applies even where the foreign interest is small.
In all cases, tax registration is required and the correct treatment must be declared through the tax portal. Given that the classification depends on ownership, even minor shareholding differences can change how the business is taxed.
Corporate Income Tax rates
The rate of corporate income tax is 20% of the net adjusted profits. Zakat is charged on the company’s Zakat base at 2.5%. The Zakat base represents the net worth of the entity as calculated for Zakat purposes.
Income from oil and hydrocarbon production is subject to tax at a rate ranging from 50% to 85%.
Not all companies face the same tax rates. Those approved under the Regional Headquarters (RHQ) regime, for example, can access a 0% corporate tax rate on qualifying income for 30 years and 0% withholding tax (WHT) on payments made by the RHQ to non-residents.
Several Special Economic Zones offer a 5% corporate income tax rate, along with customs and VAT relief on eligible imports, provided that the activity aligns with the zone’s specific focus.
Real estate transactions fall under a separate 5% real estate transaction tax, which applies regardless of the wider CIT or Zakat classification. Sector-specific rules exist but tend to be narrowly applied.
Pre-tax registration requirements
Prior to registering for tax, a business entity must obtain a Commercial Registration (CR) certificate from the Ministry of Commerce (MoC). This confirms that the entity has been legally established and is authorised to engage in commercial activities such as trade, services or industrial operations.
The new version of the CR certificate is issued digitally and contains the official business name, registration number and an embedded quick response (QR) code for accessing the details of the business through the Saudi Business Centre platform.
You cannot legally trade, invoice or open a bank account in Saudi Arabia without a valid CR. For foreign businesses, the CR is issued only after an investment licence has been approved by the Ministry of Investment of Saudi Arabia (MISA).
This is the foundational document for every foreign-owned business operating in the Kingdom. MISA offers several licence types according to sector: commercial, service-based, industrial, entrepreneurial and more.
The MISA investment licence permits 100% foreign ownership and grants access to key incentives, such as public tender eligibility, customs and tax exemptions and accelerated visa processes.
How to register with ZATCA
Having obtained a Commercial Registration certificate and, if required, a MISA investment licence, a business must register with Zakat, Tax and Customs Authority (ZATCA) via the Saudi Arabian Taxation Portal (ERAD). This should be completed within 60 days.
The first step is to create an account through the ERAD portal. After logging in, choose the type of entity and initiate the TIN application process by uploading the following required documents:
- Commercial Registration (CR) or Trade Licence number.
- National ID or passport copy of the authorised signatory.
- Proof of registered business address.
- IBAN letter from bank.
It is essential that all the submitted information is correct, or the application will be delayed or rejected. ZATCA generally verifies the application and issues the TIN within 48 to 72 business hours together with confirmation of tax classification (Zakat or CIT).
Obtaining the TIN in Saudi Arabia allows the business to activate its profile within the system, access filing functions and meet its tax obligations from the first reporting period onward.
Ongoing compliance after registration
Businesses in Saudi Arabia must file an annual income tax return within 120 days of the end of their financial year, with payment due by the same deadline.
For Transfer pricing purposes, businesses with corporate income above SAR48 million (c. USD13 million) are also required to submit a Disclosure Form of Controlled Transactions (CTDF) to ZATCA together with their annual income tax declaration within 120 days of the end of their financial year.
Documentation must be readily accessible and available for review by the tax authority at the time of submission of the CTDF and contain information and economic analysis to verify that the conditions of the controlled transactions are at arm’s length.
The CTDF requires confirmation that the taxpayer maintains a transfer pricing Master File and Local File. These must be provided to ZATCA within 30 days of a request.
Groups with global revenue over SAR3.2 billion (€750 million) must also file a Country-by-Country (CbC) report to ZATCA via the ERAD platform within 12 months of the last day of the year to which the report relates.
Saudi Arabia has not yet implemented a global minimum tax under the OECD’s Pillar Two framework, which aims to ensure that multinational enterprises (MNEs) with global revenues above €750 million pay a minimum effective tax rate on income within each jurisdiction in which they operate. However, larger MNEs should watching closely because the direction of travel is clear.
E-invoicing has been rolled out in phases and now applies to most VAT-registered entities. Thresholds and technical requirements vary depending on turnover, but electronic reporting is now firmly embedded in the system. Penalties apply for late filing, missed payments or incomplete disclosures, and these can escalate quickly. Businesses are expected to monitor their obligations closely and keep all records in good order to avoid disruption.
Withholding Tax obligations
Payments made from a resident party or a permanent establishment in Saudi Arabia to a non-resident party for services performed are subject to withholding tax (WHT). The rates vary between 5%, 15% and 20% depending upon on the type of service.
WHT should be paid within the first 10 days of the month following the month during which the payment was made.
The domestic rate for WHT paid by resident entities to a non-resident party is 5% on dividends, 5% on interest and 15% on royalties.
Consequences of non-compliance
Missing a deadline can quickly become costly. Late registration can result in fixed fines, and missed filings may trigger daily penalties until resolved. Inaccurate returns, whether due to underreported income or incomplete disclosures, can lead to charges of up to 25% of the unpaid tax.
Instalment plans are available through the ERAD portal for businesses that need more time to meet payment deadlines.
How can Sovereign PPG help?
Understanding your tax position in Saudi Arabia or registering with ZATCA can be complicated. Sovereign PPG advises companies across Saudi Arabia and the wider GCC on corporate structuring, tax registration, licensing and ongoing compliance. We also support clients with PRO, employment and visa services, helping clients to stay on track as regulations evolve.
To speak with one of our team, call T: +966 (0)535 377 578, email KSA@SovereignGroup.com, or complete the contact form below. We’d be pleased to assist.
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