Zakat & Corporate Tax
Concerned about how Corporate Tax and Zakat might impact your business? Fret not! Reach out to us for a swift consultation with our Zakat and Corporate Tax expert.
Navigating Saudi Arabia’s tax landscape, Zakat and Corporate Income Tax, offering crucial insights for businesses in this intricate fiscal terrain.
What is ZAKAT?
- Zakat is a mandatory almsgiving for eligible entities in KSA.
- It’s calculated at 2.5% of a company’s eligible net assets.
- Eligibility is determined by factors like ownership structure, capital, and profitability.
What is Corporate Tax?
- KSA introduced Corporate Income Tax in 2017, initially at 50% and later reduced to 20% in 2020.
- Taxable income includes both locally and internationally sourced income.
- SMEs with less than 5 million SAR annual revenue enjoy a reduced rate of 0-20%
Calculation and Filing:
- Zakat is calculated annually based on financial statements audited by an approved Zakat auditor.
- Corporate Tax returns are filed annually with the General Authority for Zakat and Tax (GAZT).
Zakat and Tax Exemptions:
- Certain entities, like government entities and entities wholly owned by the government, are exempt from Zakat.
- Tax exemptions apply to income derived from foreign investments and qualifying income from real estate activities.
Who is subject to Zakat?
- Saudi individual establishments.
- Shares of Saudi companies.
- Shares of non-Saudi individuals not founding partners in companies traded on the
The tax system in the Kingdom of Saudi Arabia can be significantly complex for companies. Therefore, at Business Link, we are committed to providing the necessary support and assistance to companies seeking to understand whether they are subject to the Corporate Income Tax (CIT) or the Zakat system. Our specialized team of professionals handles administrative transactions with various government ministries, public institutions, and private sector companies to facilitate compliance and ensure smooth operations.