Tax Rates in Saudi Arabia

No Personal Income Tax for Expats in Saudi Arabia

If you're moving to Saudi Arabia from the US, UK, Germany, or anywhere in Europe, here's the headline: there is no personal income tax in Saudi Arabia. Zero. Not a reduced rate, not a special expat scheme - it simply doesn't exist. Whether you earn 5,000 SAR or 500,000 SAR per month, your employment income is entirely tax-free.

This applies to everyone: Saudi nationals, GCC citizens, and all expatriate workers. Your salary, bonuses, housing allowance, end-of-service benefits, and any other employment income arrive in your bank account without any income tax deduction. For someone coming from the UK (where the top rate is 45%) or Germany (where it can reach 45% plus solidarity surcharge), the difference is enormous.

There's also no capital gains tax on personal investments, no inheritance tax, and no wealth tax for individuals. If you sell stocks through a brokerage account or sell property as an individual, you keep the full amount (property sales have a separate 5% RETT, covered below). This makes Saudi Arabia one of the most tax-efficient places in the world for employed professionals.

The only mandatory deduction from a Saudi employee's paycheck is GOSI social insurance (9.75%). For expatriate employees, even this doesn't apply - your employer pays a small 2% occupational hazard insurance on your behalf, and nothing is deducted from your salary. Your gross salary is effectively your net salary. Use our salary calculator to see the exact numbers for your situation.

Real-Life Saudi Arabia Payslip: What You Actually Take Home

Let's make this concrete. Here's what a typical payslip looks like for a mid-level expat professional in Riyadh - say, a project manager or software engineer earning 20,000 SAR/month basic salary. Compare this to what you'd see in London, New York, or Berlin.

Expat in Riyadh: 20,000 SAR Basic Salary

That's right - 26,500 SAR in, 26,500 SAR out. No deductions whatsoever. Your employer separately pays 400 SAR/month (2% of 20,000 basic) to GOSI for occupational hazard insurance, but this doesn't come from your salary.

Now compare: the same gross salary in London (roughly £5,300/month) would net you about £3,800 after income tax and National Insurance - a 28% cut. In Berlin (roughly €6,400/month), you'd take home about €3,700 after income tax, solidarity surcharge, and social contributions - a 42% cut. In New York, you'd lose roughly 30-35% to federal, state, and city taxes plus FICA.

Saudi National: Same 20,000 SAR Basic Salary

For comparison, here's how it looks for a Saudi national with the same salary. The only difference is the GOSI employee contribution:

GOSI is calculated only on basic salary, not housing or transport allowances. Capped at 45,000 SAR/month basic.

Saudi Arabia vs Western Country Tax Rates Compared

To understand why so many professionals choose Saudi Arabia, it helps to see the numbers side by side. The table below compares what an employee earning the equivalent of 25,000 SAR per month (roughly $80,000/year) would keep in different countries after income tax and mandatory social contributions.

In most Western countries, between income tax and social security, you lose 30-50% of your gross salary. In Saudi Arabia, an expat keeps 100%. This is one of the main financial reasons people accept positions in the Kingdom, often using the tax savings to pay off mortgages back home, save for retirement, or invest through brokerage accounts.

Rates are approximate for mid-to-high income earners. Actual rates vary based on income level, filing status, and deductions. Use our cost of living calculator to compare your expenses in Saudi Arabia.

Expat Dependent Fees and Iqama Costs in Saudi Arabia

While Saudi Arabia doesn't tax your income, there are government fees that function like a tax for expats. The most significant is the expatriate dependent levy, introduced in 2017. If you bring your family, you'll pay 400 SAR/month (4,800 SAR/year) for each dependent on your iqama - spouse, children, parents, or domestic workers.

For a family of four (you, spouse, two children), that's 1,200 SAR/month or 14,400 SAR/year just in dependent fees. This is a significant cost that many expats don't factor in when negotiating their salary package. Some employers cover dependent fees as part of the benefits package - always ask during job negotiations.

Real-Life Example: Annual Expat Government Costs

These fees are paid through the Absher platform or via Mada payment cards. While 15,000-20,000 SAR/year sounds like a lot, remember that you're paying zero income tax - in most Western countries, the tax on a 20,000 SAR/month salary would be 80,000-150,000 SAR/year. The dependent fees are a fraction of what you save.

Corporate Income Tax (CIT) at 20% for Foreign Businesses

While there's no personal income tax, businesses with foreign ownership do pay Corporate Income Tax. The standard CIT rate is a flat 20% on net taxable income from Saudi sources. This applies to the foreign-owned share of any business operating in the Kingdom and registered with a Commercial Registration (CR) number.

If you're an American or European entrepreneur starting a business in Saudi Arabia, CIT applies to your share of the profits. If you have a Saudi partner who owns 40% of the company, only your 60% share is subject to CIT - the Saudi partner's 40% pays Zakat instead.

Real-Life CIT Calculation Example

Let's say you're a British expat who owns 100% of a consulting firm in Riyadh. In 2025, your business had the following results:

That's 160,000 SAR in tax on 800,000 SAR profit - an effective rate of 20%. Compare this to the UK where corporation tax is 25%, or the US where combined federal + state can reach 28%. The Saudi rate is competitive, especially for service businesses with high margins.

Special CIT Rates in Saudi Arabia

Certain sectors face different rates. Natural gas investment activities are taxed at 30% on income above a specified return threshold. Oil and hydrocarbon production companies pay between 50% and 85% depending on capital investment levels. On the other end, companies qualifying for Vision 2030 incentives - such as Regional Headquarters (RHQ) relocating to Riyadh or businesses in Special Economic Zones - may receive reduced rates or tax holidays.

CIT returns are submitted through the ZATCA portal. You'll also need to comply with ZATCA e-invoicing requirements if your business issues invoices. For more details on the filing process, see our tax filing guide.

Zakat: The 2.5% Islamic Wealth Tax for Saudi-Owned Businesses

If you're from the West, Zakat is probably a new concept. It's one of the five pillars of Islam - an obligation for Muslims to give 2.5% of their wealth annually. In Saudi Arabia, this religious obligation is formalized through the tax system. Businesses wholly or partially owned by Saudi or GCC nationals pay Zakat instead of (or alongside) CIT.

The key difference between Zakat and CIT is what they're calculated on. CIT is based on net profit (income minus expenses). Zakat is based on the Zakat base, which is closer to net worth - it includes shareholders' equity, retained earnings, reserves, long-term liabilities, and net income, minus fixed assets and long-term investments.

In practice, Zakat at 2.5% of the Zakat base is usually a significantly lower burden than CIT at 20% of profits. For example, using the same consulting firm from the CIT example above: if a Saudi national owned that firm, the Zakat base might be around 1,500,000 SAR - resulting in Zakat of 37,500 SAR instead of 160,000 SAR in CIT. This is one reason ownership structure matters so much.

How Zakat Base Is Calculated

Zakat returns are filed through ZATCA within 120 days of the fiscal year-end. For mixed-ownership companies (Saudi and foreign partners), the Saudi-owned share pays Zakat and the foreign-owned share pays CIT - both filed on the same return. If you're considering a partnership, discuss this split with your legal advisor.

VAT at 15% on Goods and Services in Saudi Arabia

Value Added Tax was introduced in Saudi Arabia in January 2018 at 5% and tripled to 15% in July 2020. If you're coming from Europe, VAT works the same way you're used to - it's added to the price of most goods and services. Coming from the US, think of it as a 15% sales tax that's already included in the displayed price.

As a consumer, you'll pay 15% VAT on most purchases: groceries, electronics, dining out, utilities, professional services, and more. Some items are zero-rated (exports, international transport, qualifying medicines, investment metals) and some are exempt (financial services, residential rentals, local public transport). In practice, nearly everything you buy day-to-day has 15% VAT included.

Real-life impact: If you spend 5,000 SAR/month on groceries, dining, and shopping, about 652 SAR of that is VAT. Over a year, that's roughly 7,800 SAR - still a fraction of the income tax you'd pay in the West. Read our VAT guide to understand how it works.

For businesses, VAT registration is mandatory if annual taxable supplies exceed 375,000 SAR (about $100,000). Voluntary registration is available above 187,500 SAR. VAT returns are filed monthly or quarterly through ZATCA, depending on annual revenue. All registered businesses must also implement ZATCA e-invoicing.

For a complete breakdown of VAT categories, registration process, and filing obligations, see our comprehensive Saudi Arabia VAT guide.

Excise Tax on Tobacco, Energy Drinks, and Soft Drinks

Saudi Arabia's excise tax (also called selective tax) targets products deemed harmful to health. Introduced in June 2017, it's levied at the point of production or import - meaning it's already baked into the retail price when you buy these items. The rates are steep:

If you're a smoker moving from Europe, you'll find cigarette prices comparable to or slightly higher than Western European levels - which is unusual for the Middle East. A pack that costs £12 in the UK or €10 in France will set you back about 26 SAR (£5.50/€6.50) in Saudi Arabia. Non-smokers won't notice this tax at all.

Note: the excise tax is applied before VAT, so the 15% VAT is calculated on the excise-inclusive price. For tobacco, this means the effective combined tax burden (excise + VAT) is over 115% of the base price.

Real Estate Transaction Tax (RETT) at 5%

If you're thinking about buying property in Saudi Arabia, the main tax to know about is the Real Estate Transaction Tax (RETT). Introduced in October 2020 as a replacement for the previous 15% VAT on property, RETT is a flat 5% tax on the sale price of any real estate transaction.

Real-life example: If you buy an apartment in Riyadh for 1,500,000 SAR, the RETT is 75,000 SAR - paid at the time of transfer. If you're selling, the buyer typically bears this cost, but it's negotiable. For a villa at 3,000,000 SAR, the RETT would be 150,000 SAR.

There's no annual property tax on residential real estate in Saudi Arabia - once you've bought the property and paid the RETT, there's no recurring tax. This is a significant advantage compared to the US (where property taxes can be 1-3% annually), the UK (council tax), or much of Europe.

First-time Saudi homebuyers may receive an exemption from RETT on their first property up to 1,000,000 SAR (meaning RETT is only charged on the amount above 1 million). This exemption doesn't apply to foreign buyers, but foreigners can now purchase property in designated areas under the new foreign ownership regulations.

Saudi Arabia also has a White Land Tax at 2.5% annually on undeveloped urban land exceeding certain thresholds. This was introduced to combat land hoarding and encourage development. It only affects large landowners and developers, not typical homebuyers. You can calculate your monthly mortgage payments using our tool.

Withholding Tax on Cross-Border Payments

Withholding tax (WHT) is something you'll encounter if your Saudi business makes payments to companies or individuals abroad. When a Saudi-resident entity pays a non-resident for services, the Saudi payer must deduct WHT at source and send it to ZATCA within the first 10 days of the following month.

This is particularly relevant for expat business owners who contract with companies in their home countries - for example, hiring a US-based consulting firm, licensing software from a UK company, or paying royalties to a European patent holder. The rates vary by payment type:

Double Taxation Agreements (DTAs): Saudi Arabia has DTAs with over 30 countries, including the UK, France, India, and many others. These treaties can reduce WHT rates. The US does not currently have a DTA with Saudi Arabia, so American businesses pay the full domestic rates. Always check the applicable treaty before applying the standard rate - the full list is on the ZATCA website.

GOSI Social Insurance Contribution Rates

GOSI (General Organization for Social Insurance) is Saudi Arabia's social insurance system - similar to Social Security in the US or National Insurance in the UK. The rates differ significantly between Saudi nationals and expatriates. As an expat employee, the most important thing to know is: you pay nothing.

Your employer pays 2% of your basic salary for occupational hazard insurance, but this comes from the company's pocket, not yours. Saudi employees pay 9.75% of their basic salary (capped at 45,000 SAR/month), and their employer contributes an additional 11.75%. Here's the full breakdown:

GOSI contributions are calculated only on basic salary, not housing or transport allowances. The cap is 45,000 SAR/month. Since expats don't contribute to GOSI pension, they receive no Saudi pension at retirement. Instead, expats are entitled to end-of-service gratuity under Saudi labor law: half a month's salary per year for the first 5 years, then one full month's salary per year after that - paid tax-free when you leave. Learn more in our complete GOSI guide.

Complete Saudi Arabia Tax Rate Summary Table (2026)

Here's every tax and mandatory charge in Saudi Arabia at a glance. The system is fundamentally different from Western countries - there's no personal income tax, and business taxes depend on the nationality of the owner rather than the type of business.

Home Country Tax Obligations While Living in Saudi Arabia

While Saudi Arabia won't tax your income, your home country might still have claims on it. This is one of the most overlooked aspects of moving abroad, and it can lead to nasty surprises if you don't handle it properly before or shortly after your move.

🇺🇸 United States: You Still File (But Usually Don't Pay)

The US is one of only two countries that taxes citizens on worldwide income regardless of where they live. As an American expat in Saudi Arabia, you must file a federal return every year. However, the Foreign Earned Income Exclusion (FEIE) lets you exclude up to approximately $130,000 of earned income (2026 figure). Since Saudi Arabia has no income tax, you can't claim Foreign Tax Credits, so the FEIE is your primary tool. If you earn above the FEIE threshold, you'll owe US federal tax on the excess.

You also need to file an FBAR (FinCEN Form 114) if your foreign bank accounts ever exceed $10,000 in aggregate during the year. FATCA Form 8938 may also be required. Penalties for non-filing are severe - up to $10,000 per unreported account per year.

🇬🇧 United Kingdom: Statutory Residence Test

If you properly leave the UK (work full-time abroad, spend fewer than 16 days in the UK per tax year), you generally become non-resident under the Statutory Residence Test and owe no UK income tax on your Saudi earnings. However, you may still owe tax on UK rental income, pensions, or other UK-source income. Keep careful records of your days in and out of the UK - HMRC does check.

🇩🇪 Germany: Deregister (Abmeldung) Before You Leave

Germany taxes residents on worldwide income. To break tax residency, you must formally deregister your address (Abmeldung) at the Burgeramt and have no permanent dwelling available in Germany. If you keep an apartment or your family stays behind, Germany may still consider you a tax resident and tax your Saudi income at full German rates.

🇪🇺 EU Countries: The 183-Day Rule

Most EU countries follow the 183-day rule: if you spend fewer than 183 days per year in the country and have your center of life elsewhere, you're generally non-resident for tax purposes. France, Netherlands, Italy, and Spain each have specific rules, but the principle is similar. Some countries (like Spain) have exit tax provisions that may affect you if you hold significant assets.

🇦🇺 Australia and 🇨🇦 Canada

Australia has no formal exit procedure - residency is based on where your permanent home is. If you cut ties (sell or rent out your home, close bank accounts, move family), you generally become a non-resident. Canada requires you to sever residential ties. Both countries tax residents on worldwide income, so establishing non-residency before moving is critical. For full details on filing requirements, see our Saudi Arabia tax filing guide.

Tax Planning Strategies for Businesses in Saudi Arabia

While Saudi Arabia's tax system is simpler than most Western systems, proper planning can still save significant money. Here are the key strategies:

Ownership Structure: Zakat vs CIT

The most impactful decision is your ownership structure. Saudi/GCC ownership pays Zakat at 2.5% of the Zakat base, while foreign ownership pays CIT at 20% of net income. Using our earlier example: a consulting firm with 800,000 SAR profit would pay 160,000 SAR in CIT (foreign owner) vs approximately 37,500 SAR in Zakat (Saudi owner). If you're forming a joint venture with a Saudi partner, the allocation of ownership directly determines the tax split. Consult an advisor before structuring your company.

Leverage Double Taxation Agreements

If your business makes cross-border payments, DTAs can reduce withholding tax rates significantly. For example, the UK-Saudi DTA may reduce royalty WHT from 15% to a lower treaty rate. Always check the applicable DTA before making payments to non-residents.

Vision 2030 Incentives and Special Economic Zones

Saudi Arabia is actively attracting foreign investment. Special Economic Zones (NEOM, King Abdullah Economic City, Ras Al-Khair, Jazan, cloud computing zone in Riyadh) offer CIT holidays of up to 50 years, 0% WHT, and customs duty exemptions. The Regional Headquarters Program provides incentives for multinationals moving their MENA HQ to Riyadh. The Saudi Industrial Development Fund (SIDF) offers financing for industrial projects.

Record-Keeping and Compliance

Businesses must maintain accounting records, invoices, contracts, and supporting documents for at least 6 years. VAT records must be kept in Saudi Arabia and made available to ZATCA upon request. All invoices must comply with ZATCA e-invoicing (FATOORA) requirements. Failure to maintain proper records can result in penalties ranging from 10,000 to 50,000 SAR per violation during ZATCA audits.

Frequently Asked Questions About Saudi Arabia Tax Rates

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