Professional Tax Services in Saudi Arabia
& Regulatory Compliance

Businesses operating in Saudi Arabia are subject to several taxes depending on their ownership structure. Foreign-owned companies and mixed entities pay Corporate Income Tax (CIT) at 20% on the foreign-owned share of profits. Saudi and GCC nationals’ share of profits is subject to Zakat at 2.5% of the assessable base. All VAT-registered businesses must charge and remit VAT at 15% on taxable supplies. Businesses making payments to non-resident parties are also subject to Withholding Tax at rates ranging from 5% to 20% depending on the payment type. EPRO manages all of these obligations for our clients.

ZATCA (Zakat, Tax and Customs Authority) is Saudi Arabia’s unified tax and customs authority responsible for collecting taxes, enforcing compliance, and conducting audits. All VAT-registered businesses must file VAT returns (monthly or quarterly depending on turnover), maintain compliant tax records for a minimum of 10 years, issue ZATCA-compliant e-invoices under the Fatoora program, and respond to any audit or information requests within specified timeframes. Non-compliance can result in penalties of up to 50% of the underpaid tax amount.

ZATCA’s Fatoora e-invoicing mandate requires all VAT-registered businesses in Saudi Arabia to issue tax invoices in a specific XML digital format. Phase 1 (generation phase) required businesses to stop issuing manual or PDF invoices and switch to compliant electronic invoices. Phase 2 (integration phase) requires businesses to integrate their invoicing systems directly with ZATCA’s Fatoora platform for real-time invoice reporting. Businesses are being onboarded in waves based on annual revenue. EPRO assesses your current invoicing setup and manages the full Fatoora compliance implementation.

Zakat and Corporate Income Tax apply to different ownership portions of the same business. The Saudi and GCC national shareholders’ share of net assets (the Zakat base) is subject to Zakat at 2.5% annually – assessed on a wealth basis rather than profits. The foreign shareholders’ share of taxable profits is subject to Corporate Income Tax at 20%. For mixed ownership companies, both taxes apply simultaneously to their respective portions. The calculation of the Zakat base is complex and requires specialist knowledge – incorrect calculations are a common source of ZATCA disputes.

Withholding Tax (WHT) applies to payments made by Saudi-based businesses to non-resident parties for services performed in or outside Saudi Arabia. Common WHT rates include 5% on dividends and rent, 15% on royalties and technical services, and 20% on management fees. The WHT must be deducted from the payment at source and remitted to ZATCA by the 10th of the following month. Failure to withhold and remit correctly results in the Saudi business becoming liable for the tax plus penalties. EPRO manages WHT compliance and advisory for clients with international supply chains.

ZATCA conducts field audits and desk reviews of VAT, Zakat, and CIT returns. During an audit, ZATCA may request financial records, VAT invoices, contracts, bank statements, and supporting documentation going back up to 5 years. Audits can result in additional tax assessments, penalties, and interest charges. EPRO provides full audit representation – preparing responses to ZATCA queries, challenging incorrect assessments through the formal objection process, and negotiating settlements where appropriate. Having experienced tax advisors managing your audit response significantly improves outcomes.