Tax and compliance · ZATCA
Every Saudi company registers with ZATCA when it is formed. VAT comes later, once taxable sales pass SAR 375,000 over twelve months, and from then on every invoice has to be a Fatoora e-invoice. We register you, track the threshold and get your invoicing compliant before it matters.
Reply within one working day
15% VATMandatory above SAR 375,000
Tax registrationNamed in a client’s Google review
1 Feb 2027Wave 25 e-invoicing deadline
120 daysTo file the annual zakat and tax return
The basics
ZATCA, the Zakat, Tax and Customs Authority, taxes a company’s profit according to who owns it: the share owned by Saudi shareholders (and GCC nationals treated as Saudis) pays zakat at 2.5% of its zakat base, and the share owned by foreign shareholders pays corporate income tax at 20%. VAT at 15% is separate and applies to sales once the company is registered.
Registration with ZATCA for zakat or income tax follows straight after the Commercial Registration. ZATCA’s own deadline is the end of the first fiscal year, but your bank and your first customers ask for the tax number long before that. VAT registration follows when sales require it.
The three taxes
Zakat and corporate income tax are yearly taxes on the company’s own result, split by who owns it, while VAT is a 15% tax the company collects from its customers on most sales. A mixed-ownership company meets all three in its first year.
| Question | Zakat | Corporate income tax | VAT |
|---|---|---|---|
| Applies to | Saudi and GCC-owned share | Foreign-owned share | Most sales |
| Rate | 2.5% of the zakat base | 20% of taxable profit | 15% |
| Who bears it | The company, for that share | The company, for that share | The customer; you collect it |
| How often you file | Yearly, within 120 days | Yearly, within 120 days | Monthly or quarterly |
| When you register | At formation | At formation | Above SAR 375,000 (voluntary from SAR 187,500) |
Register for zakat and income tax at formation; watch VAT from the first sale. Late VAT registration is the penalty we see most.
Worked example
A new Saudi company must register for VAT once its taxable sales over the last twelve months pass SAR 375,000, and it may register voluntarily from SAR 187,500 of sales or expenses. Take a consultancy formed in January 2026 that starts invoicing straight away. Here is its running total, month by month.
| Month | Taxable sales | Running 12-month total | VAT position |
|---|---|---|---|
| January | SAR 40,000 | SAR 40,000 | Below both thresholds |
| February | SAR 60,000 | SAR 100,000 | Below both thresholds |
| March | SAR 80,000 | SAR 180,000 | Just below the SAR 187,500 voluntary line |
| April | SAR 90,000 | SAR 270,000 | Voluntary registration now open |
| May | SAR 110,000 | SAR 380,000 | Mandatory: past SAR 375,000, register without delay |
Registration is also mandatory when taxable sales are expected to pass SAR 375,000 in the next 12 months (Article 4 of the VAT Implementing Regulations), so a company whose signed contracts will take it past the line must register before its sales show it. ZATCA penalises late registration; we monitor the running total for clients from the first invoice.
Three things to know
Three parts of Saudi tax catch foreign owners out: zakat worked out on the balance sheet rather than on profit, Fatoora e-invoicing arriving in waves, and withholding of 5% to 20% on money paid abroad.
A mixed-ownership company files one return covering both zakat and income tax within 120 days of its year end. For a 31 December year end that is 30 April; ZATCA set 30 April 2026 for the 2025 returns.
Zakat is worked out on a zakat base drawn from the balance sheet, not on profit, so a year with thin profit doesn’t mean a small zakat bill. The 2.5% rate is set for a Hijri year, so ZATCA scales it to the days in your fiscal year: about 2.58% for a 365-day Gregorian year. Ask your accountant for a projection in the first year.
Since 4 December 2021, VAT-registered businesses issue electronic invoices. Phase two connects invoicing software to ZATCA’s Fatoora platform in waves, each announced at least six months ahead.
ZATCA’s Wave 25 announcement of 24 July 2026 covers businesses whose VAT-able revenue passed SAR 187,500 in any year from 2022 to 2025, with integration due by 1 February 2027. SAR 187,500 is also the voluntary VAT threshold, so most companies registered for VAT by 2025 fall inside it. Choose compliant software on day one and you never migrate.
Payments to non-residents carry withholding tax at ZATCA’s published rates: 5% on dividends and on technical and consulting services, 15% on royalties, and 20% on management fees. The tax and a monthly statement are due within the first 10 days of the month after payment.
A tax treaty can cut the rate, either at source when the treaty conditions are documented before payment, or through a refund claim to ZATCA afterwards. A branch’s profit sent to head office counts as a dividend, at 5%; see branch registration.
Ways to use us
New companies take the full set-up, for a fixed fee agreed up front (how we work). A company that already trades needs one piece: VAT registration when its sales cross the line, or Fatoora readiness when its wave is announced.
Full set-up
Zakat or income tax registration, VAT when due, e-invoicing readiness and the filing calendar.
For new companies and branches.
Quote the full set-upVAT
For companies already registered with ZATCA whose sales now require VAT.
For companies near SAR 375,000.
Quote VAT registrationE-invoicing
For VAT-registered companies preparing for their phase two wave.
For companies told they are in a wave.
Quote e-invoicingOrder
ZATCA set-up runs in four steps from the day the CR is issued, alongside the bank account and GOSI and Qiwa registration, and before the first work visas. Each step ends with something you keep: a written tax position, the registration, compliant invoicing and a tax calendar.
Your ownership split turned into a written zakat and income tax position, with VAT timing.
Result: a written tax position
The company registered for zakat and income tax.
Result: your ZATCA registration
VAT registered when due; invoicing software made Fatoora-compliant.
Result: compliant invoicing
VAT and withholding dates, plus the annual return deadline, shared with you and your accountant.
Result: a tax calendar
Paperwork
ZATCA registration needs the company’s CR, articles showing the ownership split, MISA registration and National Address. VAT adds sales and expense figures, bank details and the name of the invoicing system you use. Dua e Fatima’s tourism company, one of the files in our portfolio, had its tax registration done alongside the bank account and visas.
Commercial RegistrationCurrent
Articles of associationShowing the ownership split
MISA registrationFor foreign-owned companies
National AddressRegistered with SPL
Financial year endAs set in the articles
Sales and expense figuresTo test the thresholds
Bank detailsFor payments and refunds
Invoicing system detailsFor Fatoora
Tax questions · 49
From ZATCA rules and published guidance as of October 2026. Your accountant applies them to your figures.
The Zakat, Tax and Customs Authority, which runs zakat, income tax, VAT, withholding, excise and customs in Saudi Arabia.
Yes. Companies and branches both register after the CR, for zakat or income tax.
Straight after the CR. ZATCA’s legal deadline is the end of the first fiscal year, but the bank and your invoices need the tax number much sooner.
Yes, a foreign company’s branch registers with ZATCA in its own right.
Yes, online with authorised access.
No. Importers register for customs as a separate step. See trading licence.
The number ZATCA gives the company for all its filings.
20% corporate income tax on the profit attributable to foreign shareholders.
A levy of 2.5% on the zakat base attributable to Saudi shareholders and GCC nationals treated as Saudis, calculated for a Hijri year and scaled to your fiscal year.
Profit is split by ownership: zakat for the Saudi or GCC share, income tax for the foreign share.
No. Zakat is charged on a zakat base built from the balance sheet, not on the profit figure.
Within 120 days of the financial year end, under Article 60 of the Income Tax Law and Article 102 of the Zakat Collection Regulations.
The return is filed on the company’s financial statements. Whether those must be audited depends on the company’s type and size under the Companies Law, which your auditor confirms.
5% withholding on dividends to non-resident shareholders. A tax treaty can lower it, at source or through a refund claim to ZATCA.
Qualifying RHQ income is taxed at 0% for a renewable 30 years from the RHQ licence, under ZATCA’s RHQ guideline. See RHQ.
Yes. Related-party transactions must be at arm’s length, with disclosures and documentation by size.
15% standard, with some supplies zero-rated or exempt.
When taxable supplies pass SAR 375,000 in 12 months, or are expected to in the next 12.
Yes, from SAR 187,500 of taxable supplies or taxable expenses in 12 months.
To recover VAT on start-up costs and to look established to VAT-registered clients.
Yes, with no threshold, usually through a tax representative.
Monthly above SAR 40 million of annual supplies, quarterly below.
By the end of the month after the return period.
Yes, for VAT-registered businesses, when the expense relates to taxable sales and is backed by a valid tax invoice.
Yes, at 15%. A VAT-registered importer recovers it like other input VAT.
Exports of goods and some services can be, when ZATCA’s conditions are met.
ZATCA’s e-invoicing system and integration platform.
Phase one began on 4 December 2021.
Integration: invoicing systems connect to Fatoora, rolled out in waves by revenue.
ZATCA notifies the taxpayers in each wave directly. Wave 25, announced on 24 July 2026, covers VAT-able revenue above SAR 187,500 in any year from 2022 to 2025.
1 February 2027, per ZATCA’s announcement.
At least six months before a wave’s integration date.
No. E-invoices come from compliant electronic solutions.
If your current tool can’t connect to Fatoora, yes. Picking a compliant solution at the start avoids a second migration.
ZATCA penalises e-invoicing violations.
Tax deducted from certain payments to non-residents and paid to ZATCA.
5% on dividends, rent, loan charges and technical or consulting services; 15% on royalties and on payments outside the listed categories; 20% on management fees. Treaties can lower them.
Within the first 10 days of the month after the payment, with a monthly statement.
ZATCA’s January 2025 treaty circular gives two routes: the reduced rate at source, when the treaty conditions are documented before payment, or a refund claim afterwards.
Yes. Royalties and management fees paid to a non-resident parent carry withholding, and so do technical services the parent provides.
The Saudi company making the payment.
Yes, an annual statement within 120 days of year end, filed even if nothing was withheld that year where withholding cases arose.
VAT monthly or quarterly, withholding by the 10th, the annual return within 120 days of year end.
ZATCA charges penalties for late registration, and separately for late filing and late payment.
Yes. ZATCA reviews returns and audits books and invoices.
A certificate ZATCA issues after filing. Tenders and many government services ask for it.
A tax on goods such as tobacco and sweetened drinks.
Your accountant, with our compliance service keeping the calendar if you use it.
We handle registrations and the calendar; returns are prepared by an accountant. See all our company formation services for what sits around tax.
References
Opened on 15 October 2026 before citing. ZATCA’s site holds the current rules.
Tax set-up
We reply within one working day with your zakat or income tax position and the month VAT is likely to apply.
Alongside tax
Commercial Registration (CR)Forming the company with the Ministry of Commerce.Open Commercial Registration (CR) →
GOSI, Qiwa and Muqeem registrationEmployer set-up so you can hire.Open GOSI, Qiwa & Muqeem →
Corporate bank account openingThe account file, built from your CR papers.Open Corporate bank account →
PRO and compliance servicesRenewals, filings and government follow-up.Open PRO & compliance →From our guides: how to get business from NEOM as a supplier
