The following overview covers the core elements of the corporate tax regime in Saudi Arabia for 2025, with a focus on standard rates, main tax treatment for companies, and taxation specifics relevant to oil and hydrocarbon production.
Corporate Income Tax in Saudi Arabia: Key Features for 2025
Saudi Arabia (SA) imposes a flat corporate income tax on the taxable profits of companies and foreign entities operating in the Kingdom. The main rate, additional conditions, and sector-specific rules are all outlined below for the current tax year.
Corporate Tax Rates and Assessment Basis
Corporate tax in Saudi Arabia is levied on a flat basis. This means companies are taxed a single, fixed percentage of their taxable profits, rather than using a progressive bracket system.
| Type | Assessment Basis | Standard Rate (%) | Currency |
|---|---|---|---|
| Flat | Corporate Profits | 20% | SAR |
The flat 20% corporate income tax rate applies to taxable profits, assessed on a corporate basis. All figures are denominated in Saudi Riyals (SAR).
Taxation of Oil and Hydrocarbon Activities
Companies engaged in oil and hydrocarbon production are subject to special tax rates, significantly higher than the standard corporate rate. The rate applied depends on the specific nature and scope of hydrocarbon activities.
| Income Type | Tax Rate (%) | Currency | Notes |
|---|---|---|---|
| Standard Corporate Income | 20% | SAR | Applies to most companies |
| Oil & Hydrocarbon Income (minimum) | 50% | SAR | Sector-specific minimum rate |
| Oil & Hydrocarbon Income (maximum) | 85% | SAR | Can range from 50% to 85% |
In practice, companies producing oil or other hydrocarbons in Saudi Arabia are taxed at significantly elevated rates compared to other sectors. The applicable rate will be determined by a range of criteria set by the Saudi tax authorities.
Holding Periods and Additional Bracket Information
No specific minimum or maximum holding periods are provided for corporate taxation in Saudi Arabia, and there are no progressive tax brackets for general corporate income. All entities are assessed on a flat tax basis unless they operate in sectors subject to higher, sectoral rates such as oil.
Surtaxes and Sector-Specific Levies
The primary addition to the general flat corporate tax is the imposition of much higher rates for companies generating income from the production of oil and hydrocarbons. The applicable rate ranges between 50% and 85%, reflecting the Kingdom’s fiscal policies toward the hydrocarbon sector. For all other sectors, the standard flat rate applies.
Summary Table: Saudi Arabia Corporate Tax System (2025)
| Corporate Tax Type | Rate (%) | Applicable Income | Currency |
|---|---|---|---|
| Flat Corporate Tax | 20% | All general corporate income | SAR |
| Oil & Hydrocarbon Surtax (range) | 50%–85% | Income from oil & hydrocarbon production | SAR |
Pro Tips for Navigating Saudi Corporate Tax in 2025
- Ensure your company’s accounting systems are set up to clearly distinguish general business income from oil and hydrocarbon revenue. Tax rates differ significantly depending on the income source.
- Monitor regulatory updates through the official Saudi tax authority website (zatca.gov.sa), as announcements there are authoritative for calculation rules and potential future changes.
- Factor in the substantially higher surtax on hydrocarbon profits during investment planning—profitability margins and forecasts may change materially due to these elevated rates.
- Maintain accurate and transparent records. Saudi authorities scrutinize sector distinctions and may seek supporting documentation for income streams subject to different rates.
Key Considerations for International Companies
For foreign and multinational corporations, the flat corporate tax regime means predictability for non-oil business activities, but sectoral rates can present complexities for mixed-industry operations. No progressive brackets or minimum holding periods are mandated for most companies. It’s critical to differentiate income streams and to apply the corresponding rate to each as per Saudi fiscal policy.
For official, up-to-date information and authoritative guidance, visit the main page of the Saudi Zakat, Tax and Customs Authority: zatca.gov.sa/en.
Saudi Arabia’s 2025 corporate tax regime offers a streamlined flat rate for most businesses, with sector-specific rules for oil and hydrocarbon producers. The distinct split between general business rates and hydrocarbon sector rates is essential to recognize, especially for planning, compliance, and cross-border transactions. Keep on top of local regulatory guidance to ensure accurate filings and to benefit from the clarity and certainty of Saudi corporate tax policies.