Accounting and Tax Rules in Saudi Arabia

Understanding Accounting and Tax Rules in Saudi Arabia

Doing business in Saudi Arabia requires a solid understanding of accounting in Saudi Arabia and tax regulations. The ZATCA (Zakat, Tax and Custom Authority) enforces strict compliance requirements that every company, whether local or foreign-owned, must follow.

Corporate Income Tax and Zakat

• Foreign-owned companies are subject to 20% corporate income tax.
• Saudi or GCC-owned entities pay Zakat (2.5%) on their capital and
  profits.
• Mixed-ownership companies pay both, depending on the ownership
  percentage

VAT Regulations in Saudi Arabia

• VAT was introduced in 2018 and is currently set at 15%.
• Businesses exceeding the turnover threshold must register for VAT.
• Regular VAT filings are mandatory, and errors or late submissions can
  result in fines.

Bookkeeping and Financial Reporting Standards

• Companies must maintain proper bookkeeping in Saudi Arabia in line
  with SOCPA standards.
• Financial statements must be audited annually.
• Records are required to be kept in Arabic.

Penalties for Non-Compliance

Failure to comply with Saudi Arabia tax rules may lead to:

• Financial penalties.
• Restrictions on renewing the Commercial Registration (CR).
• Potential operational disruptions.

Why Compliance Matters for Foreign Companies

Compliance with ZATCA rules helps companies avoid unnecessary costs and builds credibility with Saudi authorities.

• At Saudi Business Hub, we provide full accounting, tax, and bookkeeping services to keep your business compliant and cost-efficient.