Taxation of
international executives:
Saudi Arabia
August 2022
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1 Income Tax
1.1 Tax returns and compliance
When are tax returns due? That is, what is the tax return due date?
Only individuals earning business income from self-employment are required to register with the Tax
authorities and file income tax returns. There is no income tax on employment income in Saudi Arabia and
hence individuals earning employment income only are not required to file any tax returns.
Business tax returns are due within 120 days from the end of financial year. For a December year-end
taxpayer, the due date is 30 April.
What is the tax year-end?
Most taxpayers adopt December year-end.
What are the compliance requirements for corporate/business tax returns in Saudi Arabia?
• Taxpayers are required to register with the Tax Authorities and open tax file
• Taxpayers are required to file annual income tax returns within 120 days from the end of financial year
• Taxpayers may be required (upon request by the Tax Authorities) to submit financial statements
audited by a Certified Public Accountant licensed in Saudi Arabia of their activities in Saudi Arabia
• Taxpayers are required to maintain their accounting records in Arabic language
• As an alternative for filing tax returns based on regular accounts, taxpayers may request approval to
file tax returns on deemed profit basis. The rates of deemed profit range from 10% to 85% depending
on the nature of the activities.
Residents
Individuals are considered residents in Saudi Arabia if they meet one of the following tests:
1 He is present in Saudi for 183 days or more during any taxable year, or
2 He is present in Saudi for a total of 30 days or more and has a place of abode in Saudi Arabia.
Nonresidents
< See definition of resident >
1.2 Tax rates
Corporate income tax of 20%.
Nonresidents receiving income from Saudi source may be subject to withholding tax at rates ranging from
5% to 20% depending on the nature of the service:
Management fees
20%
Royalties, consultancy and technical services and international telecommunication services paid to head
office or an affiliated company
15%
Payments against services to the head office or to a related party
15%
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Consultancy and technical services and telecommunication services (other than payments to head office
or an affiliate), rent, air tickets or airfreight or sea freight, dividends, interest on loans, insurance or re-
insurance premiums
5%
Any other payments
15%
What are the current income tax rates for residents and Nonresidents in Saudi Arabia?
Residents
Federal tax
The tax rate is 20% except the taxpayers engaged in oil and hydrocarbons production.
Nonresidents
See WHT table
1.3 Residence rules
For the purposes of taxation, how is an individual defined as a resident of Saudi Arabia? Individuals are
considered residents in Saudi Arabia if they meet one of the following tests:
1 He is present in Saudi for 183 days or more during any taxable year, or
2 He is present in Saudi for a total of 30 days or more and has a place of abode in Saudi Arabia.
Is there a de minimus number of days rule when it comes to residency start and end date? For
example, a taxpayer can’t come back to the host country for more than 10 days after their
assignment is over and they repatriate.
No.
What if the assignee enters the country before their assignment begins?
Days of presence before start of assignment will count towards residency days.
1.4 Termination of residence
Are there any tax compliance requirements when entering or leaving the country1?
Nonresidents who are shareholders in Saudi resident companies (other than companies listed on the
Saudi stock exchange) and who sell their shares may be subject to capital gain tax on the disposition of
these shares.
Communication between immigration and taxation authorities
Do the immigration authorities in Saudi Arabia provide information to the local taxation authorities
regarding when a person enters or leaves Saudi Arabia?
Tax Authorities in Saudi may communicate with immigration to obtain information about the entry and exit
dates of individuals to determine PE exposure and residency.
Filing requirements
Will an assignee have a filing requirement in the host country after they leave the country and
repatriate?
No.
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1.5 Economic employer approach
Do the taxation authorities in Saudi Arabia adopt the economic employer approach2 to
interpreting Article 15 of the OECD treaty? If no, are the taxation authorities in Saudi Arabia
considering the adoption of this interpretation of economic employer in the future?
N/A
De minimus number of days
Are there a de minimus number of days3 before the local taxation authorities will apply the
economic employer approach? If yes, what is the de minimus number of days?
N/A
1.6 Types of taxable compensation
What categories are subject to income tax in general situations?
Business income from self-employment.
Intra-group statutory directors
Will a Nonresident of Saudi Arabia who, as part of their employment within a group company, is
also appointed as a statutory director (i.e. member of the Board of Directors in a group company
situated in Saudi Arabia trigger a personal tax liability in Saudi Arabia, even though no separate
director's fee/remuneration is paid for their duties as a board member?
N/A
1 Will the taxation be triggered irrespective of whether or not the board member is physically
present at the board meetings in Saudi Arabia?
N/A
2 Will the answer be different if the cost directly or indirectly is charged to/allocated to the
company situated in Saudi Arabia (i.e. as a general management fee where the duties rendered
as a board member is included)?
Does not trigger personal income tax as it is not applicable for employment income
3 In the case that a tax liability is triggered, how will the taxable income be determined?
N/A
1.7 Tax-exempt income
Individuals are generally not subject to tax on any income earned from Saudi Arabia in their capacity as
employees.
1.8 Expatriate concessions
Are there any concessions made for expatriates in your country?
N/A
1.9 Salary earned from working abroad
Is salary earned from working abroad taxed in Saudi Arabia? If so, how?
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N/A
1.10 Taxation of investment income and capital gains
Are investment income and capital gains taxed in your country? If so, how?
No. Unless an individual is earning this income as self-employed.
Gains from employee stock option exercises
No.
Foreign exchange gains and losses
None.
Principal residence gains and losses
None.
Capital losses
None.
Personal use items
None.
Gifts
None.
Foreign property reporting
None.
Nonresident trusts
None.
1.11 Additional capital gains tax (CGT) issues and exceptions
Are there capital gains tax exceptions in your country? If so, please discuss.
Pre-CGT assets
None.
Deemed disposal and acquisition
None.
1.12 General deductions from income
What are the general deductions from income allowed in your country?
In case of business income reported as self-employed, all regular and necessary expenses to generate
the income subject to tax provided that the expenses are:
• Supported by documents.
• Connected with the income being realized.
• Related to the same tax year.
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• Not capital in nature.
1.13 Tax reimbursement methods
What are the tax reimbursement methods generally used by employers in your country?
N/A
1.14 Calculation of estimates/ prepayments/ withholding
How are estimates/prepayments/withholding of tax handled in your country? For example, Pay-
As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.
N/A for individuals.
Self-employed individuals may be required to pay 75% of their current year taxes in three equal
instalments if their prior year tax liability exceed SAR 2m ($533,333).
When are estimates/prepayments/withholding of tax due in your country? For example, monthly, annually,
both, and so on.
June 30, September 30 and December 31 for the taxpayers have December year end.
1.15 Relief for foreign taxes
Is there any Relief for Foreign Taxes in your country? For example, a foreign tax credit (FTC)
system, double taxation treaties, and so on?
No.
1.16 General tax credits
What are the general tax credits that may be claimed in your country? Please list below.
Self-employed individuals paying corporate income tax may claim any WHT deducted from their payments
as credit against the corporate income tax.
.
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2 Special considerations for short-term
assignments
For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for
less than one year.
2.1 Residency Rules
Are there special residency considerations for short-term assignments?
None.
2.2 Payroll considerations
Are there special payroll considerations for short-term assignments?
None.
2.3 Taxable income
What income will be taxed during short-term assignments?
N/A
2.4 Additional considerations
Are there any additional considerations that should be considered before initiating a short- term
assignment in your country?
N/A
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3 Other taxes and levies
3.1 Social security tax
Are there social security/social insurance taxes in your country? If so, what are the rates for
employers and employees?
Type of
employee
Pension
Unemployment
Occupational Hazardous
Employer
share
Employee
share
Employer
share
Employee
share
Employer
share
Employee
share
Saudi citizen
9%
9%
1%
1%
2%
N/A
Non-Saudi
Citizen
N/A
N/A
N/A
N/A
2%
N/A
3.2 Gift, wealth, estate, and/or inheritance tax
Are there any gift, wealth, estate, and/or inheritance taxes in your country?
None.
3.3 Real estate tax
Are there real estate taxes in your country?
On 1 October 2020, Royal Decree A84 was issued announcing the creation of a new Real Estate Transfer
Tax (RETT) with a rate of 5 percent of the real estate supply (unless exempted).
This decision marks an effort to boost the real estate sector, which forms an integral part of the Kingdom’s
Vision 2030. It also aims to support the Kingdom’s citizens and includes a commitment that the
government will bear up to 1 million Saudi riyals (SAR) in tax for the purchase of the first home by Saudi
nationals.
3.4 Sales/VAT tax
Are there sales and/or value-added taxes in your country?
VAT was implemented in Saudi Arabia from first of January 2018 at the standard rate of 5%. However,
recently, the standard rate of VAT in Saudi Arabia was increased from 5 percent to 15 percent with effect
from 1 July 2020. This increase was a response to the unprecedented economic fallout from the impact of
the COVID-19 pandemic.
3.5 Unemployment tax
Are there unemployment taxes in your country?
See section about social security taxes.
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3.6 Other taxes
Are there additional taxes in your country that may be relevant to the general assignee? For
example, customs tax, excise tax, stamp tax, and so on.
Local taxes
Saudi Arabia imposes customs duty at rates ranging from 5% to 25%.
Provincial Health Premiums
None.
Employer Health Tax
None.
Foreign financial assets
Is there a requirement to declare/report offshore assets (e.g. foreign financial accounts, securities)
to the country/territory’s fiscal or banking authorities?
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Document Classification - KPMG Public
All information contained in this document is summarized by KPMG Professional Services, Saudi Arabia, a member firm of the
KPMG global organization of independent member firms affiliated with KPMG International Limited
