Tax In Saudi Arabia
One of the most consistently challenging aspects of contracting in Saudi Arabia is complying with the country’s tax system given that there is no personal income tax for employment income in Saudi Arabia but there is a wide range of taxation policies applying to non-employment which depend on your residency status.
How do I calculate my taxable income:
Do you know much about Saudi Arabian Tax Law? Does Saudi Arabia have a tax treaty with your home country? You will need to find out or find someone who can help! There is no income tax on employment income in Saudi Arabia but non-employment income is subject to tax as an entity or permanent establishment, so you need to be sure that you’ve been taxed correctly.
If you are a contractor and want a calculation on your tax and net retention in Saudi Arabia, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax
Contractors in Saudi Arabia are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Saudi Arabian umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Saudi Arabian taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Saudi Arabian tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax:
We work with numerous umbrella companies in Saudi Arabia, many of whom are experts in tax and immigration laws. If you have any questions about tax in Saudi Arabia, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Saudi Arabian work permits.
Our advice is 100 per cent free and comes with no obligations. You will be paying taxes in Saudi Arabia but without the overhead of directly dealing with the Saudi Arabian tax authorities. Get in touch with us today for some reliable advice on tax in Saudi Arabia!
When Do You Need to Lodge Your Tax Return?:
There is no personal income tax (employment tax) in Saudi Arabia. However, non-residents conducting a business activity or deriving income from a permanent establishment in Saudi Arabia will be taxed as a ‘corporation’. To file taxes as a corporation, the following steps apply:
Step 1: Register as a new user for the Saudi Arabian Tax & Income Department portal.
Step 2: Log in to your taxpayer account here, using the username and password that you created.
Step 3: Select ‘Tax return service’.
Step 4: File the tax return using form No. 4.
Step 5: Attach the supporting documents required.
Step 6: Review and acknowledge the authenticity and accuracy of the information provided. Click ‘submit’. You will then receive a delivery acknowledge notice and invoice number.
Step 7: Pay any tax due within 120 days of the end of the tax year.
General Authority of Tax and Income: https://www.gazt.gov.sa/ar
Saudi Arabians and nationals of other Gulf Cooperation
Council (GCC) states who are residents in Saudi Arabia are not subject to income tax. The GCC states include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.
Non-Saudi and non-resident GCC nationals and entities with a permanent establishment in Saudi Arabia are subject to the flat income tax rate of 20% on their business income in Saudi Arabia.
Non-residents who do not have a legal registration or a permanent establishment in Saudi Arabia are subject to withholding tax on their Saudi Arabia sourced income. These rates for WHT are:
- 20% for management fees.
- 15% for royalties
- 5% for dividends, interest and rent.
Does the 183-day rule apply in Saudi Arabia?
When do you become a tax resident in Saudi Arabia?
An individual is considered a resident in Saudi Arabia for a taxable year if:
- One has a permanent place of residence in Saudi Arabia and resides in Saudi Arabia for a total period of not less than 30 days in the taxable year.
- One resides in Saudi Arabia for not less than 183 days in the taxable year.
Residents and non-residents of Saudi Arabia are subject to tax on worldwide income depending on the tax treaty that Saudi Arabia has with that foreign country.