Zakat, VAT, and Corporate Tax in Saudi Arabia: A Simple Guide for New Business Owners
Last updated: 30 Oct 2026
If you are opening a business, VAT in Saudi Arabia is usually the first tax you meet, but it is not the only one. The Zakat, Tax and Customs Authority (ZATCA) also collects zakat and corporate income tax. This guide explains, in plain words, which one applies to whom and when the filings fall due.
Quick answer
Short answer (as of 28 Oct 2026): VAT is charged at 15%. A business must register once its taxable supplies pass SAR 375,000 in 12 months, and may register from SAR 187,500. Companies pay zakat at 2.5% of the zakat base on the Saudi and GCC share of ownership, and corporate income tax at 20% on the other share. Zakat and income tax returns are due within 120 days of the year-end (ZATCA).
This is general information from ZATCA’s own pages, not tax advice. Your own position depends on your structure, owners and activity, so check it with a licensed accountant.
The three taxes at a glance
| VAT | Zakat | Corporate income tax | |
|---|---|---|---|
| What it is charged on | Most goods and services you sell | The zakat base | The tax base (profit) |
| Rate | 15% | 2.5% per Hijri year | 20% |
| Who | Businesses above the threshold | Saudi and GCC ownership share | Other ownership share |
| Return | Monthly or quarterly | Yearly, within 120 days | Yearly, within 120 days |
VAT: the rate and when to register
VAT is a tax on consumption. You add it to your sales, reclaim the VAT you paid on business costs, and pay ZATCA the difference.
Key takeaways
- Rate: 15% (ZATCA SME guideline).
- Mandatory registration: taxable supplies above SAR 375,000 in 12 months (ZATCA e-service).
- Voluntary registration: supplies or expenses above SAR 187,500 (ZATCA e-service).
- Returns: monthly if revenue is above SAR 40 million, otherwise quarterly (ZATCA SME guideline).
Registration is done online through your ZATCA account. ZATCA’s guideline also lists fines for late registration, late filing and late payment, so put your deadlines in a calendar from day one.
Zakat for companies
Zakat is collected from companies on the share owned by Saudi and GCC shareholders. ZATCA’s zakat guideline sets it at 2.5% of the zakat base for a Hijri year. If your financial year follows the Gregorian calendar, the rate is adjusted for the extra days (ZATCA zakat guideline).
The zakat base is not simply your profit. It follows ZATCA’s rules on what is added and deducted, which is one reason most companies use an accountant for the return.
Corporate income tax
Income tax applies to the share of a company owned by shareholders who are not Saudi or GCC, and to other cases ZATCA lists. The rate is 20% of the tax base (ZATCA regional HQ guideline).
A company with mixed ownership can therefore pay both: zakat on one share and income tax on the other. If you are a foreign investor, read our guide on whether a foreigner can start a business in Saudi Arabia first.
E-invoicing (Fatoorah)
ZATCA’s e-invoicing rules mean invoices must be issued electronically. Phase one began on 4 December 2021. Phase two, which links your system to ZATCA, has been rolled out in waves since 1 January 2023 (ZATCA e-invoicing). Check whether your wave has been announced.
Your first-year tax checklist
1
Register the business and get your commercial registration. See our registration checklist.
2
Open a ZATCA account and register for zakat and income tax as your structure requires.
3
Track your sales every month so you know when you near the VAT threshold.
4
Register for VAT once you pass it, or earlier if voluntary registration suits you.
5
Use compliant e-invoicing software.
6
Diary the deadlines: VAT returns, and the 120-day zakat and income tax returns.
Keep business and personal money apart from the start. Our guide to business banking and payments helps.
Note
This guide is general information, not legal advice and not tax advice. Rates, thresholds and rules can change, so confirm them on ZATCA and check with a licensed accountant or lawyer.
Official MISA, Ministry of Commerce and ZATCA pages
Related guides
- How to start a business in Saudi Arabia
- Can a foreigner start a business in Saudi Arabia?
- Register a business: checklist
- Commercial registration: get it and renew it
- Verify a business licence
Sources and last checked
Last checked 28 Oct 2026: ZATCA’s VAT registration e-service, its SME guideline, its zakat collection guideline, its income tax page and regional HQ guideline, and its e-invoicing page.
