Saudi Arabia

Zakat and income tax, residence, no tax on salaries, corporate income tax at 20% and oil rates, withholding taxes, RHQ, special economic zones, VAT at 15%, RETT at 5% and the France–Saudi Arabia treaty.

1 analysisCountry guide available

TAX FACTSHEET · 2026-10-05

In this factsheet

Personal and business taxation in Saudi Arabia

Documentary position as at 5 October 2026. The reference points below distinguish two direct levies that coexist in the Kingdom: Zakat, due by Saudi persons subject to it and persons treated as such, and income tax, due mainly on the shares of non-Saudi partners, by non-residents and in the hydrocarbons sector. Amounts are expressed in Saudi riyals (SAR). The Arabic texts are authoritative; the English versions published by the administration are, according to their own statements, only translations for guidance.

1. Identifying the applicable levy: Zakat, income tax and tax year

1. Income tax (ضريبة الدخل) is based on the Income Tax nizam promulgated by Royal Decree No. M/1 of 15 Muharram 1425H, which the administration dates 7 March 2004, last amended, according to the consolidated version published by the Zakat, Tax and Customs Authority (ZATCA), by Royal Decree No. M/153 of 5/11/1441H. Its Implementing Regulations were adopted by Ministerial Resolution No. 1535 of 11/6/1425H; the version consulted incorporates the amendments up to Resolution No. 2568 of 12/8/1440H. S01 S02 S05 S44 S45

2. Article 2 of the Law lists the taxable persons: a resident capital company, for the shares held, directly or indirectly, by non-Saudi persons or by persons engaged in the production of oil and hydrocarbons, except, for the latter, shares held in resident capital companies listed on the Saudi financial market and shares that those listed companies hold in other capital companies; a non-Saudi resident natural person who carries on an activity in the Kingdom; a non-resident who carries on activity through a permanent establishment; a non-resident who derives taxable income from Saudi sources without a permanent establishment; and lastly persons engaged in natural gas investment or in the production of oil and hydrocarbons. S01 S04

3. Zakat (الزكاة) falls under a separate body of rules: the Implementing Regulations for Zakat Collection of 1445H, issued by Resolution of the Minister of Finance No. 1007 of 19/08/1445H and amended by Resolution No. 1248 of 11/10/1446H. Its Article 3 covers in particular a resident Saudi person carrying on a licensed activity, and a sole proprietorship and a company established in the Kingdom and owned by Saudis, for the share of the latter. S17 S18

4. The two regimes are in principle mutually exclusive. Article 6 of the Zakat Regulations excludes from its scope persons subject to the Income Tax Law and the shares of legal persons subject to that tax. A resident capital company with mixed shareholding is therefore subject to Zakat on the Saudi share and to income tax on the non-Saudi share. S01 S17 S03

5. For income tax, Article 22 of the Law defines the tax year as the fiscal year of the State, while allowing the taxpayer to adopt another twelve-month period under the conditions of the Regulations. For Zakat, the “Zakat year” is the financial year of the person liable, whether it follows the Hijri or the Gregorian calendar; the rate is then prorated where the financial year does not correspond to the Hijri year. S01 S17

6. The system also includes separate indirect taxes: value added tax (VAT), governed by a national nizam adopted pursuant to the unified agreement of the States of the Gulf Cooperation Council (GCC), and the Real Estate Transaction Tax (RETT). This factsheet presents them separately, without claiming to cover excise taxes, customs duties or sectoral regimes. S24 S26 S27 S28

2. Residence of individuals, arrival and departure

7. Under Article 3(a) of the Law, a natural person is resident for a tax year if he or she meets one of two conditions: having a permanent place of residence in the Kingdom and staying there for at least 30 days in total during the year; or staying there for at least 183 days during the year. Part of a day counts as a whole day, but mere transit between two points located outside the Kingdom is not taken into account. S01 S05

8. The Implementing Regulations, cited by the ZATCA guidelines, define a permanent place of residence as accommodation owned by the person, rented for a total period of at least one year during the tax year, or made available to him or her by a third party for at least one year. The administration specifies that nationality is not taken into account in assessing residence and that the days may be consecutive or not. S02 S05 S18

9. The Zakat Regulations adopt the same criteria for the Zakat year: a permanent place of residence and presence of at least 30 days, or presence of at least 183 days without a permanent place of residence, with the same rule for partial days and transit. The two regimes therefore adopt a broadly parallel definition of residence, but draw different consequences from it depending on nationality. S17 S18

10. The criterion of domicile or of the centre of economic interests does not appear in the texts consulted: residence is assessed year by year, on the basis of physical presence and, where applicable, of the place of residence. The texts consulted do not provide for splitting the year in the event of arrival or departure: residence is assessed for the tax year in the light of the two conditions, which makes the date on which the permanent place of residence is established or given up decisive. S01 S05

11. The texts consulted do not provide for an exit tax on the unrealised gains of a natural person who leaves the Kingdom. This finding is limited to the Law, its Regulations and the guidelines read; it is without prejudice to the reporting obligations on cessation of activity, Article 60 of the Law requiring a taxpayer who ceases its activity to inform the administration and to file a return within sixty days following the cessation. S01

12. ZATCA provides a service for issuing tax residency certificates to natural persons, through its electronic portal. The user manual consulted describes the application procedure, but not the criteria for issue; the scope of this certificate with regard to a tax treaty therefore remains to be assessed case by case. S36

3. Resident individuals: no tax on salaries and taxation of activity

13. Apart from the natural gas and hydrocarbons sectors, which Article 2 of the Law and Article 1 of the Regulations cover for any person, Saudi or not, Article 2 covers, among resident natural persons, only a non-Saudi person who carries on an “activity”. Article 1 defines activity as commercial activity in all its forms, professional or vocational activity or any similar activity carried on for profit, including the use of movable and immovable property. S01 S05 S02

14. In the texts consulted, no provision establishes a tax on the salaries of employed natural persons, whether Saudi or foreign, or a progressive scale. The Law uses the concept of salary only to govern the deductibility of remuneration paid to partners. This finding is limited to the Law, its Regulations and the guidelines read; it covers neither social security contributions nor any levies falling under other administrations. S01 S02 S04

15. The Implementing Regulations specify that taxable activity does not include the mere opening of bank accounts, whether current, term or savings accounts, nor transactions in shares of companies listed on the Saudi financial market carried out by a resident natural person. The administration also points out, for a foreign non-resident, that income from deposits in local banks is not taxable, unless he or she carries on a professional or commercial activity. S02 S03 S13

16. A non-Saudi resident natural person who carries on an activity is taxed at the rate of 20% on his or her tax base, consisting of his or her taxable income derived from any activity from Saudi sources, less deductible expenses. The tax base of each natural person is determined separately; the operating loss of a natural person is assessed by reference only to the receipts and expenses of the activity. S01 S11

17. Apart from the natural gas and hydrocarbons sectors, a Saudi, and a person treated as such, who carries on a licensed activity falls not under income tax but under Zakat. The Law defines a Saudi citizen as a person who holds Saudi nationality and a person treated as such; the Zakat Regulations expressly treat as such nationals of GCC Member States receiving identical treatment. S01 S17 S18

18. The obligations of a taxpayer who is a natural person follow the ordinary rules: registration with ZATCA before the end of the first financial year, filing and payment within one hundred and twenty days following the end of the tax year. The administration indicates a fine of SAR 1,000 for failure by a natural person to register on time, compared with SAR 10,000 for a joint stock company and SAR 5,000 for other entities. S01 S04

4. Zakat of Saudi persons subject to it and of GCC nationals

19. Zakat is levied at the rate of 2.5% of the Zakat base for a Hijri year. Where the financial year of the person liable differs from the Hijri year, the rate is equal to 2.5% divided by the number of days in the Hijri year, multiplied by the number of days in the financial year. S17

20. The Regulations define a “Saudi” as a person of Saudi nationality and nationals of GCC States treated as Saudis. The ZATCA general guidelines infer from this that GCC citizens residing in the Kingdom are subject to Zakat if they carry on an activity under a licence issued in the Kingdom, and that a non-resident Saudi is not subject to the Regulations. S17 S18

21. Residence alone is not sufficient: Saudi nationality, or being treated as Saudi, and the carrying on of a licensed activity are also required for a natural person or a sole proprietorship. A sole proprietorship owned by a non-Saudi, or established outside the Kingdom even if owned by a Saudi, does not fall within the scope of the Regulations. S18

22. For resident companies, Zakat applies to the shares held by Saudis and by public entities; financing funds licensed by the Capital Market Authority are themselves subject to Zakat. By way of exception, shares held by non-Saudi shareholders in companies listed on the Saudi stock exchange are subject to Zakat, except those of non-Saudi founders. ZATCA specifies, symmetrically, that shares of non-Saudis acquired for speculative purposes through trading in listed shares are not counted among the non-Saudi shares subject to income tax. S17 S18 S03

23. A legal person is resident for Zakat purposes if it is incorporated under the law of the Kingdom or if its head office is located there. The head office is deemed to be in the Kingdom if at least two of the following three criteria are met: regular board meetings, senior executive decisions, activities generating the majority of revenue. A resident company then pays Zakat on its activity and that of its branches in and outside the Kingdom. S17

24. This statutory Zakat, based on activity, is distinct from individual Zakat on private wealth. ZATCA offers individuals an optional service, “Zakaty”, which allows them to pay their Zakat from the Kingdom or abroad through electronic payment systems. The texts consulted do not make it a compulsory levy on the wealth of natural persons. S19

5. Non-residents and withholding tax

25. A non-resident who carries on an activity in the Kingdom through a permanent establishment is taxed at 20% on the profit of that establishment. Article 4 of the Law defines a permanent establishment as a fixed place through which the activity is carried on in whole or in part, including through an agent, and covers in particular construction sites and assembly installations, installations for the exploration of natural resources, the fixed base of a natural person and the branch of a non-resident company. S01 S06

26. Article 5 of the Law lays down the source rules. Income is of Saudi source in particular where it arises from an activity carried on in the Kingdom, from immovable property located there, from the disposal of shares in a resident company, from dividends and management fees paid by a resident company, or from amounts paid by a resident for services performed in whole or in part in the Kingdom. The place of payment is irrelevant, and payment by a permanent establishment is treated as payment by a resident company. S01 S06

27. A non-resident without a permanent establishment is taxed by way of withholding tax where his or her income falls under Article 68 of the Law and Article 63 of the Regulations. Any resident, whether a taxpayer or not, and any permanent establishment of a non-resident that pays an amount from a Saudi source to a non-resident must withhold the tax; a natural person is required to do so only for payments connected with his or her activity. S01 S06

28. The rates result from Article 68 of the Law, which sets in particular 5% for rent, air tickets, freight and international telecommunications, 15% for royalties, 20% for management fees, and a rate set by the Regulations, up to a maximum of 15%, for other payments. Article 63 of the Regulations adopts the following schedule, applied to the gross amount without deduction of expenses. S01 S02 S06 S07

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Payment to a non-resident without a permanent establishment	Rate	Sources
Management fees	20%	S02 S07
Royalties	15%	S02 S06
Technical or consulting services and international telecommunications services paid to the head office or to a related company	15%	S02 S07
Technical or consulting services and international telecommunications paid to another person	5%	S02 S07
Rent	5%	S02 S06
Air tickets, air or sea freight	5%	S02 S06
Dividends distributed	5%	S02 S06
Loan returns	5%	S02 S06
Insurance or reinsurance premiums	5%	S02 S06
Any other payment	15%	S02 S06

29. Dividends mean any distribution by a resident company to a non-resident shareholder and any profit transferred by a permanent establishment to related persons; liquidation in excess of paid-up capital is treated as such. Distributions by companies engaged in natural gas, oil or hydrocarbons investment do not bear withholding tax. ZATCA indicates that the 5% withholding tax applies to the net distributable profit, after the income tax borne by the company on the share of the non-resident partner. S02 S06 S15

30. The person required to withhold must register, remit the tax withheld within the first ten days of the month following the payment and provide the recipient with a certificate. It also files an annual return, which ZATCA places not later than one hundred and twenty days after the end of its financial year. It is personally liable for the unpaid tax and the late-payment penalties if it has not withheld the tax, has not remitted it or has not provided the required information; the recipient itself remains liable for the tax not withheld. S01 S06 S07

31. Withholding tax is in principle final: Article 68(e) of the Law precludes any other taxation of the income that has borne it and any refund. This final character gives way where the payment is made to a non-resident having a permanent establishment to which the amount is directly connected, or to a taxpayer who includes it in its tax base: the withholding tax is then credited against the tax due. S01 S06

32. Domestic rates may be reduced or eliminated by a tax treaty. ZATCA accepts two routes: direct application of the treaty rate, on an application filed on its portal by the person withholding, accompanied by a foreign residence certificate and an approved form, legalised or apostilled; or withholding at the domestic rate followed by a refund claim, already provided for by Circular No. 3227/19 of 9/6/1431H (23 May 2010), which the person who withheld the tax files with the recipient’s residence certificate. S08 S09

33. Capital gains realised by a non-resident on fixed or current assets, or on shares in a resident company, fall not under withholding tax but under the general rules of the Law. ZATCA indicates that a non-resident GCC company disposing of shares in a Saudi company must declare the capital gain and pay the tax at the rate of 20%. S02 S06 S14

6. Investment income and capital gains

34. For a resident natural person without an activity, the texts consulted do not provide for the taxation of bank interest or of gains from trading in listed shares: these transactions are excluded from the concept of activity. For taxpayers falling under income tax, Article 10 of the Law provides for three exemptions, which presuppose that the income first falls within the scope of the tax. S01 S02 S05

35. First, capital gains on the disposal of securities traded on the Saudi financial market, or on a foreign market where the securities are also traded in Saudi Arabia, are exempt. The Regulations require that the disposal be made in accordance with capital market law and that the securities not have been held before the entry into force of the regime, which the administration sets at 30 July 2004. S01 S02 S05

36. ZATCA reserves this exemption for resident investors: a non-resident legal person remains taxable on capital gains on the disposal of listed securities, whatever the form of the issuing company. This administrative reading combines with the exclusion, for a resident natural person, of transactions in listed shares from the scope of taxable activity. S12 S02

37. Next, the gain from the disposal of property that is not an asset of the activity is exempt. The administration illustrates this with the disposal of a manager’s personal vehicle held by a company, and specifies that the gain remains taxable where the property is an asset essential to the taxpayer’s main activity. S01 S05

38. Lastly, distributions in cash or in kind received by a resident capital company from its holdings in resident or non-resident companies are exempt if it holds at least 10% of the capital of the distributing company and keeps that threshold for at least one year. Bonus share distributions are covered as distributions in kind. S01 S02 S05

39. Interest, dividends and royalties paid to a non-resident fall under the withholding tax described in section 5, subject to treaties. Dividends received from a foreign company by a resident natural person without an activity have not been the subject of a specific rule in the texts consulted; their treatment is not stated here. S02 S06

7. Companies: residence, tax base, rates and hydrocarbons

40. A company is resident if it is incorporated under the Companies nizam or if its central management is located in the Kingdom. Resolution of the Minister of Finance No. 2194 of 12/7/1432H specifies that central management is deemed to be located there where at least two of the following three criteria are met: regular board meetings, senior executive decisions, and the majority of activities and revenue in the Kingdom. S01 S05 S06

41. A capital company, defined as a joint stock company, a limited liability company or a partnership limited by shares, investment funds being treated as such, is taxed only on the portion of its taxable income attributable to non-Saudi partners and to partners engaged in the production of oil and hydrocarbons, subject to the exception provided for in Article 2 for listed companies. The tax base of the company is computed independently of that of its partners and subsidiaries, even in the case of accounting consolidation. S01 S05

42. Article 7 of the Law sets the following rates. The rate applicable to oil and hydrocarbons taxpayers depends on the cumulative amount of their capital investments in the Kingdom, before depreciation, and results from Royal Decree No. M/131 of 29/12/1438H, applicable from 1 January 2017. S01 S11

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Category of taxpayer	Rate on the tax base	Sources
Resident capital company (non-Saudi share)	20%	S01 S11
Non-Saudi resident natural person carrying on an activity	20%	S01 S11
Non-resident carrying on activity through a permanent establishment	20%	S01 S11
Natural gas investment	20%	S01 S11
Oil and hydrocarbons, investments exceeding SAR 375 billion	50%	S01 S11
Oil and hydrocarbons, investments of more than SAR 300 billion up to SAR 375 billion	65%	S01 S11
Oil and hydrocarbons, investments of more than SAR 225 billion up to SAR 300 billion	75%	S01 S11
Oil and hydrocarbons, investments not exceeding SAR 225 billion	85%	S01 S11

43. The 20% rate applicable to natural gas investment results from Royal Decree No. M/70 of 11/7/1439H, applicable from 1 January 2018. According to the note in the consolidated version, it also applies, for five years from 1 January 2020, to the tax base of the downstream activities of oil-producing taxpayers; failing separation of those downstream activities from production within that period, the tax is levied according to the oil scale, in accordance with Royal Decree No. M/13 of 18/01/1441H. The consequences of this transitional period after 2024 have not been verified. S01

44. Net operating losses may be carried forward without time limit to subsequent years, until fully recovered. The Regulations cap the annual deduction at 25% of the profit for the year according to the taxpayer’s return; losses from the gas activity and those from the oil activity cannot be set off against each other. S01 S02 S22

45. The return is filed within one hundred and twenty days following the end of the tax year, and the tax is paid within the same period. A certified public accountant licensed in the Kingdom must certify the return where taxable income exceeds SAR 1,000,000. Article 70 also requires three advance payments, payable not later than the last day of the sixth, ninth and twelfth months of the tax year, equal to 25% of the previous year’s tax less the withholdings suffered, unless this calculation does not reach SAR 500,000. S01

46. The penalties stated by the administration include: for late filing, the higher of 1% of total revenue, capped at SAR 20,000, or a percentage of the unpaid tax rising from 5% to 25% depending on the length of the delay; a late-payment penalty of 1% of the unpaid tax for each period of 30 days; and a penalty of 25% of the tax difference in the case of false information or fraud. S04

47. Article 63 of the Law allows the administration to disregard a transaction that has no tax effect and to recharacterise a transaction whose form does not reflect its substance; it may also make an estimated assessment. The arm’s length principle is implemented by transfer pricing bylaws, adopted by ZATCA Board Resolution No. 6-1-19 of 25/05/1440H (31 January 2019); the table of definitions in the guide on regional headquarters reproduces this number in the form “19-1-6”. S01 S20 S34 S17 S22

8. Special regimes: regional headquarters, special economic zones and Pillar Two

48. The Regional Headquarters (RHQ) programme is based on Royal Decree No. M/62 of 28/04/1445H (12 November 2023), which grants the tax incentives, and on the tax rules adopted by ZATCA Board Resolution No. 9-1-24 of 23/07/1445H (4 February 2024), a number reproduced as “24-1-9” in the English version of the guide. The entity must obtain a regional headquarters licence from the Ministry of Investment. S20 S21

49. A qualifying regional headquarters that meets the substance requirements benefits, for thirty years, renewable, from the date of its licence, from an income tax rate of 0% on eligible income derived from eligible activities. It must not carry on any other revenue-generating commercial activity, such activities having to be carried on by related companies holding the necessary licences. S20

50. For the same period, a 0% withholding tax applies to dividends, to payments to related persons and to payments to unrelated persons for services necessary for the activity of the headquarters. The benefit does not apply to payments connected with non-qualifying activities or to the avoidance arrangements referred to in the guidelines. S20

51. The substance requirements include, in particular, holding strategic meetings and keeping minutes and records in the Kingdom, operating expenditure proportionate to the activities, income derived from eligible activities and at least one director resident in the Kingdom within the meaning of the law on residence permits, and not merely within the meaning of the tax law. VAT applies to the regional headquarters under the ordinary rules. S20

52. Special economic zones are governed by regulations adopted by Council of Ministers Resolution No. 468 of 10/07/1447H (30 December 2025). The ZATCA guide lists four zones: King Abdullah Economic City (KAEC), Ras Al-Khair, Jazan and the Cloud Computing zone. S22

53. In the first three zones, the income from the qualifying activities of a licensed entity is taxed at 5% for twenty years. The guide specifies that this regime also applies to entities owned by Saudi investors or GCC investors treated as such, which are then taxed under the zone’s income tax rules, and that it will be reviewed when the Pillar Two rules are applied in the Kingdom. Non-qualifying income remains taxed at 20% and must be computed separately. S22

54. A licensed entity in these zones is exempted from withholding tax on payments to non-residents, except in the case of abuse, but must report those payments annually. Certain supplies there are subject to VAT at the zero rate under conditions. Economic substance regulations specific to the zones were adopted by ZATCA Board Resolution No. 03-02-26 of 10/10/1447H (29 March 2026). S22 S23

55. As regards Pillar Two, no Saudi text establishing a minimum top-up tax, whether domestic or under the income inclusion rule, has been identified among the sources consulted. The guide on special economic zones refers only to the future “application” of the global minimum tax rules in the Kingdom. This factsheet therefore adopts no rule on the matter; this point must be verified before any analysis of a multinational group likely to fall within the scope of those rules. S22

9. VAT

56. VAT (ضريبة القيمة المضافة) is governed by the nizam promulgated by Royal Decree No. M/113 of 2/11/1438H, amended by Royal Decree No. M/52 of 28/4/1441H and Royal Order No. A/638 of 15/10/1441H, and by the GCC unified agreement. ZATCA indicates that the Law came into application on 1 January 2018. S24 S26 S27

57. Article 2 of the Law sets the standard rate at 15% of the value of the supply or importation, unless exemption or zero rating is provided for by the Law and its Regulations. The Implementing Regulations organise the transition to this rate for supplies made after 1 July 2020. ZATCA refers to chapter six of the Regulations for zero-rated supplies. S24 S25 S16

58. The GCC unified agreement sets the mandatory registration threshold at SAR 375,000 of annual supplies and the voluntary registration threshold at 50% of that amount. The Saudi Regulations require an unregistered resident to check each month its supplies over the past twelve months and those expected over the next twelve months, and to apply for registration within thirty days following the end of the month in which the threshold is exceeded. S26 S25

59. A non-resident required to pay VAT in a Member State must register there regardless of its turnover, directly or through a tax representative. Supplies of real estate transferring ownership have, since October 2020, been exempt from VAT in favour of the RETT; by contrast, commercial leasing remains subject to VAT under the ordinary rules, as ZATCA points out for a commercial lease of more than three years, while the leasing or licensing of residential property is exempt under the Implementing Regulations. S26 S30 S43 S25

10. Real estate: Real Estate Transaction Tax (RETT)

60. The RETT was first established by Royal Order No. A/84 of 14/02/1442H, which exempted disposals of real estate from VAT, and applied from 4 October 2020. It is now governed by the nizam promulgated by Royal Decree No. M/84 of 19/03/1446H, which entered into force on 12/10/1446H, i.e. 10 April 2025, and by its Regulations adopted by ZATCA Board Resolution No. 25-03-01 of 24/09/1446H (24 March 2025). S28 S29 S30 S31

61. Article 2 of the Law sets the rate at 5% on any real estate transaction, whatever the condition, form or use of the property, whether the transaction concerns all or part of the property, a completed property or one sold off-plan, and whether or not it is registered. ZATCA specifies that there is no minimum threshold and that the base is the agreed value, which may not be lower than the market value at the date of the transaction. S28 S32

62. The concept of transaction is broad: sale, gift or waiver, exchange, finance lease, lease-to-own, ijara ending in transfer of ownership, usufructs of more than fifty years and, under conditions, disposals of shares in real estate companies. A real estate company means any entity holding, directly or indirectly, real estate in the Kingdom with a view to deriving income from its sale or leasing, where its market value represents at least 50% of the total market value of its assets at the date of the transfer or at any time during the preceding 365 days. A disposal of shares is a real estate transaction only if one person, or several persons acting in concert, dispose of at least 30% of the shares, in one or more related transactions over a period of three years; below that, it falls outside the scope of the tax. S28 S30 S29

63. The transferor is the person legally liable for the tax, even if the parties may agree on a different allocation. Article 7 of the Law makes the transferee jointly liable only if it is established that the transferee caused the failure to pay, which the detailed guide repeats while also referring to underpayment or delay; a ZATCA FAQ states more broadly that the transferor and the transferee are jointly liable for all tax obligations. Payment is made through ZATCA’s online service before the transfer formalities. S33 S30 S28

64. Article 3 of the Law provides for numerous full exemptions, including the division of an estate, an authenticated gift to a spouse or to a relative up to the third degree, the execution of a notarised bequest, an in-kind contribution to the capital of a company established in the Kingdom, a transfer to a Saudi company or fund wholly owned by the transferor who is a natural person, and certain restructurings between 100%-owned companies. Several exemptions are subject to a holding period set by the Regulations, up to a maximum of five years. S28 S29 S30

65. The ZATCA guide specifies that the exemption for a family gift ceases if the donee transfers the property, within three years of the deed, to a person who could not have benefited from the exemption. It also points out that Royal Order No. A/84 of 1442H provided for the State to bear the RETT, for citizens, up to a price of SAR 1,000,000 on the acquisition of a first home. S30

66. The texts consulted do not provide for an annual property tax on the ownership of a dwelling. This finding is limited to the ZATCA texts read; any fees or taxes on land falling under other administrations have not been researched. Rent received by a non-Saudi natural person falls under income tax if the leasing constitutes an activity within the meaning of the Law, the use of immovable property being expressly included in it. S01 S28

11. Wealth, inheritances and gifts

67. No tax on the net wealth of natural persons has been identified in the texts consulted. The France–Saudi Arabia treaty mentions a wealth tax among the Saudi taxes covered, but in the form of taxes “of an identical or similar nature” to those of France, imposed at any date whatsoever; this mention does not demonstrate the existence of such a tax under Saudi law. S37

68. No inheritance or gift tax has been identified in the Income Tax Law, the regulations and the guides read. Gratuitous transfers of real estate fall under the RETT, which exempts the division of an estate within the limit of the legal shares, a notarised bequest and an authenticated gift between spouses or relatives up to the third degree. Where the property is an asset of a taxpayer subject to income tax, Article 9(h) of the Law also deems a disposal by gift or inheritance to be made at market value, the natural person not taking into account the gain on an asset unrelated to his or her activity. S28 S30 S01

69. The RETT inheritance exemption covers only the first transfer without consideration. It does not extend to the subsequent sale, by an heir, of his or her share to a co-heir or to a third party, which is taxed at the rate of 5%. S30

70. The Zakat of companies and of natural persons carrying on an activity applies to a base determined from the financial position of the person liable, by items added and deducted, with a minimum base. It is not, however, a tax on private wealth: the Regulations cover only persons liable who carry on a licensed activity, and the individual Zakat payment service offered by ZATCA is optional. S17 S18 S19

12. France–Saudi Arabia treaty and exchange of information

71. The tax treaty between France and Saudi Arabia was signed in Paris on 18 February 1982 and, according to the BOFiP, entered into force on 1 March 1983. The ZATCA page indicates entry into force on 1 February 1983; the French date is adopted here. Concluded for five years, it is renewed for periods of five years by exchange of notes; the last published renewal, by Decree No. 2024-227 of 14 March 2024, covers the period beginning on 1 January 2024. S40 S41 S38

72. The treaty was amended by an amending protocol (avenant) of 2 October 1991, which entered into force on 1 July 1995, then by an amending protocol signed in Paris on 18 February 2011, which entered into force on 1 June 2012; its Article 3(2) makes it applicable to calendar years or accounting periods beginning on or after 1 January of the calendar year following its signature, i.e. 1 January 2012, whereas the BOFiP adopts 1 January 2013. The 2011 amending protocol inserts Article 18 B on exchange of information. The DGFiP publishes consolidated versions, which do not replace the authentic texts. S39 S40 S38

73. The OECD Multilateral Convention (MLI) modifies the treaty. It entered into force on 1 May 2020 for Saudi Arabia and takes effect for withholding taxes where the event giving rise to them occurs on or after 1 January 2021, and for other taxes for periods beginning on or after 1 November 2020. It introduces a clause denying the treaty benefit where obtaining it is one of the principal purposes of an arrangement. S38

74. Residents within the meaning of Article 4 are persons liable to tax in a State by reason of their domicile, residence, place of management or any other criterion of a similar nature; conflicts are resolved by the successive criteria of permanent home, centre of vital interests, habitual abode and nationality. For Saudi taxes, the treaty covers income tax and corporate tax as well as Zakat, which the English translation published by ZATCA refers to as “Zakat Dues”. S37 S42

75. Dividends are taxable only in the State of residence of the beneficiary, unless effectively connected with an activity carried on in the other State; the same applies to income from debt-claims. Royalties are taxable in the State of residence of the beneficiary and “also” in the State of source where they are connected with an activity carried on there. For dividends and income from debt-claims, these provisions rule out the Saudi withholding tax for a beneficiary who meets their conditions, Article 18 A(2) nevertheless reserving the application of Saudi domestic law to income from debt-claims that is not effectively included in the base of French tax; the Protocol, however, specifies that Article 7 applies to income from debt-claims paid by a national of one of the States to a bank or financial institution having the nationality of one of them, and its scope for other creditors remains to be verified. S37 S08

76. Gains from immovable property are taxable in the State in which the property is situated; gains from the disposal of shares representing a substantial holding, defined as the right to 25% or more of the profits, are taxable in the State of the company. Other gains are taxable only in the State of residence of the transferor, unless connected with an activity carried on in the other State. S37

77. By virtue of the most-favoured-nation clause, as interpreted by the BOFiP following the Saudi treaties with Turkey and Austria, the threshold for independent professions becomes 183 days in a twelve-month period, that for construction sites more than twelve continuous months, and that for intellectual or technical services more than six months in a twelve-month period. Profits derived from the export of goods or services to the other State are not taxable there. S37 S40 S38

78. Salaries are taxable in the State in which the employment is exercised if the employee stays there for more than 183 days during the tax year concerned or if the employer is a resident of that State; otherwise, they are taxable only in the State of residence. Remuneration for employment exercised aboard a ship or aircraft operated in international traffic is taxable in the State in which the place of effective management of the enterprise is situated. Government remuneration is reserved to the paying State, except in the case of an industrial or commercial activity. S37

79. Article 18 A(2) provides for a clause against double non-taxation: each State taxes under its domestic law income, other than dividends, allocated to the other State by the treaty where it is not effectively included in the base of the tax of that other State. It applies neither to Saudi citizens, nor to companies more than 50% owned by them, nor to income temporarily exempted under an official incentive scheme. S37

80. For France, Article 15 exempts from French tax the income from immovable property, gains from immovable property and industrial and commercial profits (bénéfices industriels et commerciaux) from Saudi sources of a resident of France, subject to the effective rate rule (taux effectif) and to Article 18 A(2) where such income, other than dividends, is not effectively included in the base of Saudi tax, and grants a tax credit for other income. The portion of the income of a Saudi company more than 50% owned by a company managed from France is taxable in France with a credit, except for income temporarily exempted under an incentive scheme. S37

81. Real estate wealth located in France of a resident of Saudi Arabia is taxable in France only if its value exceeds that of certain French listed shares and debt-claims that he or she holds; the BOFiP specifies, for the real estate wealth tax (impôt sur la fortune immobilière), the scope of these concepts and accepts certain securities and debt-claims of the European Union. As regards inheritances, immovable property is taxable in the State in which it is situated and movable property not connected with an activity in the State of residence of the deceased. S37 S40

82. Article 18 B allows the exchange of foreseeably relevant information, without bank secrecy being able to be invoked. The Kingdom is also a party to the multilateral competent authority agreement on automatic exchange of financial account information; Saudi reporting financial institutions have transmitted their reports to ZATCA each year since 2018. S37 S39 S35

13. Illustrative cases and limits of application

83. Case 1 — a French salaried executive moves to Riyadh on 1 February 2026, into accommodation rented for two years. Present in the Kingdom for more than 183 days in 2026, he is resident there for that year, which does not give rise to any Saudi taxation of his salary in the texts consulted. His residence within the meaning of Article 4 of the treaty, which presupposes liability to tax by reason of domicile, residence, place of management or any other criterion of a similar nature, and the effect of Article 18 A(2) on France’s right to tax this salary not included in a Saudi tax base, are points to be examined under French law. S01 S05 S37

84. Case 2 — a French company holds 40% of a Saudi limited liability company, the remainder belonging to Saudi partners. The Saudi company pays Zakat on the Saudi share and the 20% tax on the French share; the dividend paid to the French company bears, under domestic law, a 5% withholding tax on the after-tax profit, which Article 6 of the treaty leads to setting aside if the treaty conditions are met and the ZATCA procedure is followed. S01 S15 S17 S37 S08

85. Case 3 — a non-resident French consultant works for four months in Saudi Arabia for a local client, without a fixed installation. The client applies, under domestic law, a 5% withholding tax on consulting services paid to an unrelated person. Under the treaty, neither the 183-day period adopted for independent professions nor the period of more than six months adopted for intellectual or technical services of enterprises is reached, depending on the characterisation adopted; this finding supports an application to ZATCA for the treaty rate or for a refund, provided that the remuneration is effectively included in the base of French tax, failing which Article 18 A(2) allows Saudi Arabia to apply its domestic law. ZATCA has also published a circular on service permanent establishments with regard to treaties. S02 S07 S40 S08 S10 S37

86. Case 4 — a foreign group sets up a regional headquarters in Riyadh and a production subsidiary in the Jazan special economic zone. The headquarters benefits from the 0% rate on its eligible activities and from 0% withholding tax on its dividends, subject to substance; the subsidiary is taxed at 5% on its qualifying activities for twenty years and is exempted from withholding tax. The absence of an identified text on Pillar Two does not make it possible to conclude that these regimes are neutral for a large group. If the parent company were resident in France, the clause of Article 15 relating to Saudi companies more than 50% owned would not apply to income temporarily exempted under a scheme aimed at developing investment, and Article 18 A(2) likewise excludes such income; the characterisation of the regional headquarters and of the special economic zones with regard to these exceptions remains to be examined. S20 S22 S37

87. Case 5 — a resident of France acquires an apartment in Jeddah, then disposes of it a few years later. Each transaction bears the 5% RETT on the value, payable by the transferor unless otherwise agreed; the gain realised by an individual on property that is not an asset of an activity appears to be covered by the exemption in Article 10(b) of the Law, although Article 5 attaches it to a Saudi source, a point to be confirmed with ZATCA, while Article 9 of the treaty allocates to Saudi Arabia the right to tax this gain from immovable property; the French exemption provided for in Article 15 nevertheless gives way, pursuant to Article 18 A(2), if the gain is not effectively included in a Saudi tax base, none of the exceptions in that paragraph covering an individual resident of France who does not have Saudi citizenship, a point to be examined under French law. S28 S30 S01 S37

88. Limits of application: this factsheet does not reconstruct the Zakat rules on the tax base of companies, excise taxes, customs duties or the social security contributions of the General Organization for Social Insurance (GOSI), for lack of a downloaded official source, or the detail of transfer pricing. The French consequences of departure, in particular exit tax, are not analysed. Each rule must be verified against the authoritative Arabic texts and the official pages at the date of the transaction. S01 S17 S22 S37

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Saudi Zakat, Tax and Customs AuthorityZATCA, vingt-cinquième vague Fatoora ↗
Document date: 2026-07-24 · Recorded source access: 2026-09-20

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