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How to do Corporate Income Tax Registration in Saudi Arabia?

Q: Who is subject to CIT in Saudi Arabia?

Foreign-owned businesses in Saudi Arabia.Non-Saudi individuals conducting business in Saudi Arabia.Non-residents with a permanent establishment or taxable income in Saudi Arabia.

Updated on: Dec 5th, 2024

13 min read

Traditionally, Saudi Arabia’s tax system was centred around Zakat, a religious obligation for Muslim-owned businesses. As the Kingdom grew its economy, the country’s corporate and societal culture also diversified. The shift to diversity made it imminent for KSA to introduce CIT to create a formalised tax framework for non-residents and foreign entities. This also helped KSA to align with global investment practices.

This guide will walk you through registering and filing corporate tax in KSA, covering:

Why CIT registration matters
How to register for CIT
Required documents
Saudi Arabia's corporate tax rate
Penalties for non-compliance

What is Corporate Income Tax (CIT) in Saudi Arabia?

Corporate Income Tax (CIT) in Saudi Arabia is levied on the profits earned by foreign-owned businesses and certain mixed-ownership companies in the Kingdom. Saudi nationals and GCC citizens pay only Zakat (an Islamic wealth tax) and are exempt from corporate tax. This tax is for foreign entities.

Requirements for CIT Registration in Saudi Arabia

The following table summarises who is required to pay and register for corporate tax in KSA.

Category of Taxpayer	Specific Description
Resident Company with Foreign Ownership	Companies based in Saudi Arabia that have shares owned directly or indirectly by non-Saudi or non-GCC individuals or entities.
Non-Saudi Individuals Conducting Business	Non-Saudi nationals who carry out commercial or professional activities within Saudi Arabia’s borders.
Non-Residents with a Permanent Establishment (PE)	Foreign individuals or entities operating a fixed base or branch in Saudi Arabia, such as an office or factory, that qualify as a permanent establishment.
Non-Residents with Saudi-Sourced Income	Foreign individuals or entities earning income from sources within Saudi Arabia without a permanent base, paying tax through withholding on income types like royalties or dividends.
Natural Gas Investors	Companies or individuals engaged specifically in investments within the natural gas sector in Saudi Arabia.
Oil and Hydrocarbon Producers	Corporations involved in extracting or processing oil and other hydrocarbon products within the Kingdom.

Step-by-Step Process for CIT Registration in Saudi Arabia

This section covers a step-by-step process to complete your corporate income tax registration in KSA:

Step 1: Complete the Ministry of Commerce Registration

Begin by registering your business with the Saudi Ministry of Commerce to establish your company as a legal entity within Saudi Arabia.

Documents Required:

Commercial registration certificate
Identification documents for Saudi or GCC citizens: National ID or passport
ID for foreign nationals: Passport and residency permit (Iqama)
Company’s Articles of Association (AoA)
Memorandum of Association (MoA)
Ownership and investment proof

Step 2: Receive Registration Information

After registration with the Ministry of Commerce, you will receive an official registration number and details about your business entity. These will be necessary for your tax registration.

Step 3: Sign Up on the ZATCA Website

Visit the Zakat, Tax, and Customs Authority (ZATCA) website to create your firm’s account for starting the CIT registration process.

Documents Required:

National ID or passport
Contact information
Commercial registration number

Step 4: Complete Required Information

After setting up your account, fill in the required business and financial information on the portal.

Documents Required:

Financial statements
Bank account details
Legal documents for foreign ownership
Shareholder Information

Step 5: Receive Application Confirmation Message

Once the ZATCA verifies your application, you will receive a confirmation message from ZATCA confirming your registration. Post that, make sure you annually file for your returns and make the CIT payment on time to avoid penalties and fines.

Corporate Income Tax Rate

Here’s a table summarizing corporate income tax rate for different categories:

No.	Taxpayer Category	Tax Rate
1	Saudi-based companies with foreign ownership (non-Saudi or non-GCC nationals)	20%
2	Non-Saudi residents engaging in business activities in Saudi Arabia	20%
3	Foreign entities with a permanent establishment (PE) in Saudi Arabia	20%
4	Non-residents earning Saudi-sourced income without a permanent establishment	5%, 10%, 15%, or 20%
5	Companies involved in natural gas investment	30%
6	Oil and hydrocarbon producers	50% to 85% based on scale

Corporate Income Tax Calculation in KSA

To calculate your corporate tax obligations, you need to know the rate that is applicable to your business. The following table sums it up:

To calculate the Corporate Income Tax (CIT) rate in Saudi Arabia, first find out the applicable rate for your business. As we saw in the table, the standard CIT rate in Saudi Arabia is 20% for most foreign-owned businesses. So, let’s take an example to understand the calculation process:

Let’s say a foreign-owned company in Saudi Arabia has the following financial details:

Total Revenue: SAR 1,000,000

Expenses: SAR 400,000

Taxable Income: SAR 1,000,000 - SAR 400,000 = SAR 600,000

To calculate the CIT, CIT Rate = 20%

So, the Corporate Tax would be:

CIT = SAR 600,000 * 20% = SAR 120,000

Benefits of CIT Registration

The registration for corporate tax also comes with a lot of benefits. They are:

Registration makes sure that your business adheres to Saudi tax laws, avoiding penalties.
It grants foreign businesses full operational legitimacy within Saudi Arabia.
When you regularly file your returns, you maintain an accurate financial reporting system for your business and improve your credibility.
For an international business, compliance with international tax standards appeals to global investors.
It also contributes to Saudi Arabia’s economic diversification efforts under Vision 2030.
It builds trust with local partners, clients, and regulators.
Registration also reduces the risk of operational disruptions due to tax-related non-compliance.

Conclusion

Saudi Arabia has very strict rules for corporate tax compliance. Businesses that fail to register or file their tax returns on time face a penalty of 1% of the outstanding tax for every 30 days of delay. Plus, such businesses may also be subject to:

Interest charges
Fines
Getting blacklisted
Business license renewal can be banned

Given the stringent penalties, timely CIT registration and accurate filing is unavoidable for foreign entities who want to run a business in KSA.

Frequently Asked Questions

What is the CIT rate in Saudi Arabia?

The standard CIT rate in Saudi Arabia is 20% for most foreign-owned businesses. However, certain sectors, like oil and gas, may have different rates, ranging from 30% to 85%.

Who is subject to CIT in Saudi Arabia?

Foreign-owned businesses in Saudi Arabia.
Non-Saudi individuals conducting business in Saudi Arabia.
Non-residents with a permanent establishment or taxable income in Saudi Arabia.

How can I register for CIT in Saudi Arabia?

To register, complete your Ministry of Commerce registration, sign up on the ZATCA website, provide your business information, and submit your application. You’ll need documents like your commercial registration, ID proof, and financial statements.

What is the timeline for CIT registration?

CIT registration should be done within 30 days of starting your business or becoming liable for tax. Delays can result in penalties.

What are the penalties for non-compliance with CIT regulations?

Failure to comply can lead to penalties of 1% of the unpaid tax for every 30 days of delay, plus possible interest charges and business activity suspension.