Tax system in Saudi Arabia
Saudi Arabia does not levy a general personal income tax on employment salaries, wages or ordinary investment income. A natural person conducting a taxable business, a non-resident earning Saudi-source income, or a person involved in oil and hydrocarbon production can still fall within the Income Tax Law.
The business system separates ownership and activity. Zakat generally applies to the Saudi and qualifying GCC ownership share of a Saudi business, while income tax generally applies at 20% to the non-Saudi share, foreign establishments and permanent establishments. Oil and hydrocarbon producers can face much higher sector rates.
Indirect taxes are important even when personal income tax is zero. The standard VAT rate is 15%, mandatory VAT registration generally begins at SAR 375,000 of taxable supplies, withholding tax applies to many payments to non-residents, real-estate transactions are generally subject to 5% RETT, and excise tax applies to selected goods.
Other charges include customs duties on imports and white-land fees on qualifying undeveloped land. Excise tax is generally 50% on soft drinks and sweetened drinks and 100% on tobacco, energy drinks and vaping products, with a sugar-content methodology applying to sweetened drinks from January 2026.
Tax rates at a glance
- Personal income tax
- 0%No salary PIT
- Zakat
- 2.5%
- Income tax
- 20%
- VAT
- 15%
- Withholding tax
- 5%–20%
- Real-estate transaction tax
- 5%
- Excise tax
- 50%–100%
- White-land fees
- 2.5%–10%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
Expatriate employeesRegional operatorsEnergy and infrastructure businessesInvestorsSaudi-based founders
Watch out for
- A 0% salary-tax headline does not mean a business is tax-free. Zakat, income tax, VAT, WHT, customs, excise and payroll contributions can all be relevant.
- The tax result for a Saudi company depends heavily on the ownership split, the legal form, the activity and whether income is Saudi-source or connected with a permanent establishment.
- Saudi Arabia also has property-specific charges, including 5% RETT and white-land fees that can apply to qualifying undeveloped land in designated areas.
Frequently asked questions
Does Saudi Arabia have personal income tax?
Saudi Arabia does not impose ordinary personal income tax on salaries and wages. Business activity by an individual and certain Saudi-source income can be treated differently under the Income Tax Law.
What taxes apply to companies in Saudi Arabia?
A Saudi company may have Zakat on the Saudi or qualifying GCC ownership share and 20% income tax on the non-Saudi share. Companies may also need to handle VAT, withholding tax, customs, excise and real-estate transaction tax.
Is Saudi Arabia a tax-free country?
No. It is low-tax for employees because salaries are not subject to PIT, but the Kingdom has a substantial business and indirect-tax system.