Does a Saudi company pay zakat or corporate income tax?

Ownership decides. The Saudi/GCC-owned share is assessed to zakat, the non-GCC share to corporate income tax at 20%, and mixed ownership is apportioned between the two regimes.

Are small companies exempt from zakat?

Size changes the amount, not the regime. A small Saudi-owned establishment remains within zakat, and a liability can arise even in a loss-making year.

How is zakat calculated?

On the zakat base, derived from funding sources and adjusted assets rather than from profit. The rate is 2.5% for a Hijri financial year and 2.578% for a Gregorian one.

When is withholding tax due on foreign payments?

When a Saudi entity pays a non-resident for services. Rates run from 5% to 20% depending on the payment type, and the obligation sits with the Saudi payer.

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Saudi Zakat, Income Tax & Withholding Calculator

Saudi Arabia does not levy one profits tax on every company — ownership decides the regime. This tool splits your entity between zakat and income tax, and works out withholding on payments to non-residents.

Not tax advice. An illustrative estimate using rates current at 2026-08-31. The zakat base in particular is an accounting exercise that is not derived from profit, and this tool does not compute it for you. Verify against zatca.gov.sa and a qualified adviser.

1. Zakat and income tax

The Saudi/GCC-owned share is assessed to zakat, the remainder to corporate income tax. Mixed ownership requires both computations.

Saudi / GCC ownership (%)100 = wholly GCC-owned, 0 = wholly foreign-owned

Zakat base (SAR)Not profit. Derived from funding sources and adjusted assets — a loss-making company can still have a zakat base.

Adjusted net profit (SAR)A component of the base always assessed at 2.5%, even on a Gregorian year. Leave blank if it is already included in the base above.

Taxable profit (SAR)Used only for the non-GCC share

2. Withholding on payments to non-residents

The obligation sits with the Saudi payer, not the overseas supplier — which is why it catches companies buying foreign software and services.

Payment type

Payment amount (SAR)

Rate20%

Withheld and remitted0

Net to supplier0

Withheld amounts are remitted to ZATCA by the 10th day of the following month.
A double-tax treaty may reduce these, but relief usually depends on a tax residency certificate obtained before payment rather than after.
Check gross-up clauses in supplier contracts — some shift the whole cost to you, raising the real price.

Why ownership, not size

People arriving from other markets assume small companies are exempt and large ones pay. Saudi Arabia works differently: a small Saudi-owned establishment is within zakat, and a small foreign-owned company is within income tax at 20% of taxable profit. Size changes the amount, not the regime.

The sharper difference is that zakat does not follow profit. It is assessed on a base derived from funding and assets, so a loss-making year can still carry a liability — a recurring shock to founders.

For the detail, read the zakat, corporate tax and withholding guide, or the VAT calculator.