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Corporate tax is an income tax levied on the income earned by the business. Only non-Saudi businesses are liable for corporate income tax in Saudi Arabia. If both Saudi and non-Saudi owners own a company, the portion of taxable income attributable to the non-Saudi interest is subject to income tax in Saudi Arabia. The Saudi share of income goes into the basis on which Zakat is assessed.
According to the Saudi income tax law, the following are subject to income tax in Saudi Arabia:
The corporate income tax rate is 20% of the net adjusted profits. Zakat is charged on the company’s Zakat base at 2.5%. Zakat base represents the entity's net worth as calculated for Zakat purposes.
It should be noted that, although the income tax rate is 20%, income from the following two activities is subject to different rates:
There is no capital duty, stamp duty, or payroll tax in Saudi Arabia. While there is no real estate tax, Zakat (religious tax) may be payable on real estate if held for speculation. A real estate transaction tax applies to the disposal of real estate at a rate of 5%.
Zakat also applies to companies that are resident in Saudi Arabia and other GCC nations. It is levied at a flat rate of 2.5% and is chargeable on the total of the taxpayer's capital resources held for more than 12 months and income not invested in fixed assets. These include the company’s capital, net profits, retained earnings, and reserves not created for specific liabilities.
TallyPrime is a business management software with a range of business modules to manage the growing needs of your business, it is qualified by ZATCA (GAZT) as a compliant e-Invoicing (FATOORA) software.
Being business ready is not what you do on the date of implementing the corporate tax in Saudi Arabia; it's about the things you should do today for a smooth shift to the corporate tax era.
TallyPrime can help your business in Saudi Arabia with its powerful integrated features including:
Ready to experience TallyPrime? Book your free demo Now, and we are sure you'll be delighted to see how TallyPrime adapts to your business.
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