If you want to incorporate in Saudi Arabia, this article will educate you on the tax laws for a LLC which is the most common company type in Saudi Arabia.
There are two corporate tax regimes in Saudi Arabia. Corporate Income Tax is levied on the Non-Saudi/GCC resident entities, or its portion of income attributable to Non-Saudi/GCC-owned shares, and Zakat, which is levied on the higher of the net worth or net adjusted profits of a Saudi/GCC resident entity, or its portion of Saudi/GCC-owned shares. Saudi Arabia only taxes income arising within the country. Therefore, offshore income, from our research, but seek professional advice, is not taxable. Zakat standard rate is 2.5%. Corporate Income Tax standard rate is 20%. This ranks Saudi Arabia as 70th when compared to CIT globally. Income from activities such as exploitation of natural gas and production of oil and hydrocarbons are subject to a progressive tax rate 30%-85% and 85%, respectively.
There is no value-added tax in Saudi Arabia, that ranks the country as 1st when compared to VAT taxation rate internationally. However, Saudi Arabia has announced the introduction of VAT at a rate of 5% by January 2018. In terms of other taxation, an employer may contribute 11% to the equivalent of a social security fund and an employee may contribute 11%. The overall complexity of the tax system is low. This is measured by average time to comply with a country's labor tax requirements is as it is 34hours. Contributing to this is the number of yearly labor tax payments, which is 12 in SA.
Thin cap standards aren't in play. This refers to any sort of requirements on companies' debt-to-asset ratios.
Dividends received from a Saudi resident subsidiary are considered business ordinary income and subject to Corporate Income Tax. An exemption may apply if there is a minimum holding of 10% held for at least 1 year and the subsidiary was subject to CIT. There may be similar rules for groups subject to Zakat. Dividends are payments of a company earnings, established by the board of directors, to a class of its shareholders. Dividends can be issued as stock, cash, or property.
Capital Gains are subject to Corporate Income Tax or Zakat, being exempted those from the disposal of shares of a Company traded in Saudi Stock Exchange, subject to certain conditions. A capital gains tax is levied on the profits that a corporation or natural person realizes when they sell sells a capital asset for a price that is higher than the purchase price.
The interest withholding tax rate is estimated at 5%. This means that the relevant tax authorities expects companies to automatically withhold 5% of interests paid to non-residents. The dividends withholding tax rate is 5%. This means that the relevant tax authorities expects legal entities to pay tax on 5% of dividends remitted abroad. Royalties are subject to a withholding tax of 15%. This should be interpreted that a company should withhold 15% of its payments on royalties to non-residents. Withholding tax rates may be reduced or eliminated under a tax treaty.
There is no tax on net wealth on individuals in Saudi Arabia. There are no known inheritance and transfer taxes in Saudi Arabia. Some undeveloped lands within urban areas may be subject to a real property tax. There are tax incentives and exemptions for investments in six undeveloped provinces in Saudi Arabia.
The above is not tax or legal advice for your particular situation. We are able to to help you find to a lawyer in Saudi Arabia who can answer all your questions. Contact us today. Click the free consultation button above.
It takes approximately - hours to file and prepare documents for a Saudi Arabia Islamic law (Sharia).
The corporate tax is approximately 20% which is 70 in the world.
Owners of a company in Saudi Arabia are not allowed to carry back a loss and may be allowed to carry forward a loss for 100 years.
The vat rate in Saudi Arabia is 0% which ranks 1 in the world.