Zakat vs Income Tax in Saudi Arabia: Rates & Deadlines ![Logo](https://centralcdn.hespah.com/logolight_file2png.webp) ![Logo](https://centralcdn.hespah.com/logo_file1png.webp) [Skip to main content](#main-content)[![Hespah LLC](https://centralcdn.hespah.com/home_logolight_file2png.webp)](/en) More [Home](/en) Tax [Learning Hub](/en/courses) [Blog](/en/blog) [Contact Us](/en/contact) Login[New Account](/en/register) 1. [Home](/) / 2. [Blog](/blog) / 3. The Difference Between Zakat, Income Tax and Corporate Tax in Saudi Arabia The Difference Between Zakat, Income Tax and Corporate Tax in Saudi Arabia ========================================================================== 2026-09-01 / 18 hours ago What is the difference between zakat and income tax in Saudi Arabia? -------------------------------------------------------------------- Zakat is a religious obligation collected from Saudis and those treated as Saudis at 2.5% of the zakat base. Income tax, by contrast, applies to the shares of non-Saudis and to non-residents at 20% of the tax base. A taxpayer therefore falls under zakat, under tax, or under both — according to the nationality of the owners, not the type of activity. Because the terms are so often confused, this guide sets out the practical differences between **zakat and income tax** as they appear in the laws and regulations issued by the Zakat, Tax and Customs Authority, together with the statutory rates and filing deadlines. ![An accountant's desk with financial documents and a calculator for computing zakat and income tax](https://centralcdn.hespah.com/uploads/emils/17882315680.jpeg) There is no separate «corporate tax» law in the Kingdom ------------------------------------------------------- Many people search for «corporate tax in Saudi Arabia» assuming it is a third, standalone regime. In fact, what a company pays on its profits is the **income tax** set out in the Income Tax Law — not a separate system. The phrase «corporate tax» is therefore a colloquial description of income tax applied to a legal person, not a statutory term. A company is also not treated as a single entity when the liability is computed. The law looks at *the owners' shares*: a Saudi partner's share falls under zakat, and a non-Saudi partner's share falls under income tax — even when both sit in the same commercial registration. Who is subject to zakat, and who to income tax? ----------------------------------------------- First, the zakat side. Article 3 of the Implementing Regulation for Zakat Collection identifies those subject to its provisions: 1. A resident Saudi person carrying on a licensed activity in the Kingdom. 2. A sole proprietorship owned by a Saudi and established in the Kingdom. 3. A company owned by a Saudi and established in the Kingdom, the share of a Saudi partner or shareholder in resident companies, and the shares of government bodies and institutions and those in their standing. 4. Financing funds licensed by the Capital Market Authority. 5. Resident companies owned by the State and resident companies owned by the Public Investment Fund, under the controls set out in the relevant royal orders and ministerial resolutions. 6. The share of a non-Saudi shareholder in resident companies listed on the Saudi capital market, excluding the shares of non-Saudi founders. The Regulation also defines a «Saudi» as: «a person holding Saudi Arabian nationality, and whoever is treated as such among the nationals of the Gulf Cooperation Council states». A GCC national is therefore treated as a Saudi for zakat purposes. Article 6, by contrast, sets out who is **not** subject to the Regulation, including a taxpayer under the Income Tax Law and the shares of legal persons that are subject to income tax. Who is subject to income tax? ----------------------------- Second, the tax side. Article 2 of the Income Tax Law lists the persons subject to tax as follows: 1. A resident capital company, in respect of shares owned directly or indirectly by non-Saudi persons, and likewise shares owned by persons working in the production of oil and hydrocarbons. 2. A resident non-Saudi natural person carrying on an activity in the Kingdom. 3. A non-resident person carrying on an activity in the Kingdom through a permanent establishment. 4. A non-resident person with taxable income from sources in the Kingdom without having a permanent establishment there. 5. A person working in the field of natural gas investment. 6. A person working in the production of oil and hydrocarbons. Zakat and income tax rates: what do you actually pay? ----------------------------------------------------- First, the zakat rate. Article 15 of the Regulation provides that the zakat rate is two and a half percent (2.5%) of the zakat base for the Hijri year. Because most entities prepare their accounts on the Gregorian year, the Regulation sets out an explicit adjustment formula: > Zakat rate = (2.5% ÷ number of days in the Hijri year) × number of days in the taxpayer's financial year Second, the income tax rates set out in Article 7 of the Law. The burden therefore differs substantially between zakat and income tax: Case Tax rate Resident capital company 20% Resident non-Saudi natural person carrying on an activity 20% Non-resident, for an activity carried on through a permanent establishment 20% Taxpayer working in natural gas investment 20% Oil and hydrocarbon production — capital investments exceeding SAR 375 billion 50% Oil production — investments exceeding SAR 300 billion and up to SAR 375 billion 65% Oil production — investments exceeding SAR 225 billion and up to SAR 300 billion 75% Oil production — investments not exceeding SAR 225 billion 85% Comparison table: zakat and income tax side by side --------------------------------------------------- The table below condenses the substantive differences between zakat and income tax into one view, from the governing instrument through to the filing deadline. Point of comparison Zakat Income tax Governing instrument Implementing Regulation for Zakat Collection Income Tax Law and its Implementing Regulation Who is subject Saudis and GCC nationals treated as such Non-Saudis, non-residents, and the oil and gas sectors Base Zakat base = additions − deductions Taxable income less allowable expenses Rate 2.5% of the zakat base for the Hijri year 20% in the general case Effect of a loss A taxpayer may still be assessed despite a loss if the base is positive No tax where there is no positive tax base Filing deadline 120 days from the end of the zakat year 120 days from the end of the tax year Authority Zakat, Tax and Customs Authority Zakat, Tax and Customs Authority The zakat base: why you may pay zakat despite a loss ---------------------------------------------------- This is the point that confuses business owners most, and it is the most important practical difference between zakat and income tax. The zakat base is not built on profit alone. Article 21 provides that an accounts taxpayer computes the zakat base by adding the addition items set out in Article 23 and deducting the deduction items set out in Article 26. Equity and long-term liabilities therefore enter the computation, which can produce a positive base even alongside a book loss. Article 27 nevertheless sets a minimum base linked to adjusted net profit. Its third paragraph states expressly that where the base is negative and the taxpayer has realised no adjusted net profit, the accounts taxpayer has no zakat base to be assessed on. ![The Riyadh skyline and modern buildings reflecting the business environment subject to zakat and income tax in Saudi Arabia](https://centralcdn.hespah.com/uploads/emils/17882315681.jpeg) Zakat and income tax filing deadlines ------------------------------------- First, the zakat return. Article 102 of the Regulation requires an accounts taxpayer to file the zakat return and settle the amounts due within a period not exceeding 120 days from the end of the zakat year. Where the last day of that period falls on an official holiday, the due date extends to the first working day after the holiday. Second, the tax return. Article 60 of the Income Tax Law requires the return to be filed within one hundred and twenty days from the end of the tax year it represents. It adds that a taxpayer whose taxable income exceeds one million Saudi riyals must have the return certified by a certified public accountant licensed to practise in the Kingdom. Third, special cases. A taxpayer who ceases activity files a return for the short period within sixty days of the date of cessation, and a partnership files an information return on or before the sixtieth day from the end of its tax year. Alongside these, do not overlook the other obligations that run in parallel with zakat and income tax — chief among them value added tax and the requirements of [e-invoicing and the second phase of integration](https://hespah.com/en/blog/e-invoicing-phase-2-saudi-arabia), which are administered by the same authority and carry their own separate deadlines. Withholding tax: the forgotten third obligation ----------------------------------------------- A third obligation is frequently overlooked. Every resident — whether or not a taxpayer — and every permanent establishment in the Kingdom must withhold tax from amounts paid to a non-resident from a source in the Kingdom. Article 68 sets the following rates: Type of payment Withholding rate Rent 5% Royalty or proceeds 15% Management fees 20% Payments for air tickets or air or sea freight 5% Payments for international telephone services 5% Any other payments specified by the Regulation Capped at 15% Whoever withholds the tax must register with the Authority and remit the withheld amount within the first ten days of the month following the month of payment to the beneficiary. More importantly, the person responsible for withholding is personally liable for the unpaid tax and the associated late-payment penalties if the tax is not withheld as required. Common mistakes with zakat and income tax ----------------------------------------- The following errors recur among small and medium-sized entities when applying the zakat and income tax rules: 1. **Assuming a company is either a zakat payer or a tax payer.** A mixed-ownership company is assessed on both tracks according to the ownership percentages. 2. **Computing zakat on profit alone.** The zakat base starts from sources of funds and addition items, not from the net profit line. 3. **Applying the 2.5% rate as-is to a Gregorian year.** The rules require the rate to be adjusted by actual days under the Article 15 formula. 4. **Overlooking withholding tax on payments abroad.** Software subscriptions, consultancy and management fees frequently fall into this category. 5. **Leaving the financial statements to the last moment.** The 120-day window covers preparation, audit, filing and payment — not filing alone. Frequently asked questions -------------------------- ### Does a GCC national pay zakat or income tax in Saudi Arabia? A national of a Gulf Cooperation Council state is treated as a Saudi under both the zakat and income tax regimes, since the Regulation defines a «Saudi» as a holder of Saudi Arabian nationality and whoever is treated as such among GCC nationals. Their share is therefore subject to zakat. ### What are the zakat and income tax filing deadlines? The period is the same in both cases. The zakat return is filed within 120 days from the end of the zakat year, and the tax return within 120 days from the end of the tax year. ### Is zakat computed on the Hijri or the Gregorian year? The statutory rate of 2.5% is set on the Hijri year. Where the zakat year differs from the Hijri year, zakat is computed by actual days under the formula in the Regulation. ### Is there an exemption from zakat? Yes. Article 7 provides an exemption for taxpayers carrying on public-benefit activities subject to specified conditions, through an annual application submitted to the Authority within 120 days from the end of the zakat year. ### Who certifies the tax return? Under the Law, a taxpayer whose taxable income exceeds one million Saudi riyals must have the return certified by a certified public accountant licensed to practise in the Kingdom. How to master zakat and income tax in practice ---------------------------------------------- At Hespah Academy we build our training material on the laws in force and their official sources, not on circulated summaries. Understanding zakat and income tax therefore begins with the statutory text itself. For those wanting to go deeper on the practical tax side, the [VAT Specialist certification](https://hespah.com/en/blog/shhad-akhsayy-dryb-alkym-almdaf) is a practical starting point. You can also review the [map of professional certifications for accountants and finance professionals in Saudi Arabia](https://hespah.com/en/blog/professional-certifications-saudi) to choose the right path, or the [CME-1B exam guide](https://hespah.com/en/blog/cme-1b-guide) for those heading into the capital market. Official sources ---------------- - [Implementing Regulation for Zakat Collection 1445H — Zakat, Tax and Customs Authority](https://zatca.gov.sa/ar/RulesRegulations/Taxes/Documents/ZakatRegulation_1445.pdf) - [Income Tax Law — Zakat, Tax and Customs Authority](https://zatca.gov.sa/ar/HelpCenter/guidelines/Documents/%D9%86%D8%B8%D8%A7%D9%85%20%D8%B6%D8%B1%D9%8A%D8%A8%D8%A9%20%D8%A7%D9%84%D8%AF%D8%AE%D9%84.pdf) - [Income tax page — Zakat, Tax and Customs Authority](https://zatca.gov.sa/ar/Pages/IncomeTax.aspx) These sources remain the only authoritative reference in any dispute concerning zakat and income tax. *This article is for general information only and is not a substitute for consulting the official sources or a qualified specialist before taking any action.* Articles you might like ----------------------- [![E-Invoicing in Saudi Arabia: Phase Two and Integration Requirements](https://hespah.com/en/og-image/e-invoicing-phase-2-saudi-arabia)2026-08-26 ### E-Invoicing in Saudi Arabia: Phase Two and Integration Requirements Everything you need on e-invoicing in Saudi Arabia: phase one versus phase two, approved formats, the cryptographic stam](/blog/e-invoicing-phase-2-saudi-arabia) Start your educational journey with Hespah LLC ============================================== Contact us to get a free lesson now [Book a free lesson]()Contact a consultant [![Hespah LLC](https://centralcdn.hespah.com/home_logo_file1png.webp)](/en) Tax and Accounting Professional Training USDEnglish [](https://x.com/hespahco)[](https://www.instagram.com/hespahco)[](https://www.linkedin.com/company/hespahco/) ### Fast Links [courses](/en/courses) [Tax](/tax) [Usage and Refund Policy](/en/contact) ### Contact us New Castle, DE, 19720 US SubscribeSubscribe to our newsletter to get the latest news and offers All Rights Reserved Hespah LLC © 2026 Developed by [, 10 - Ashara ](https://10ashara.com)