What is the income tax rate for expats running a business in Saudi Arabia?

If you are a non-Saudi resident natural person conducting business in Saudi Arabia, you are subject to income tax at a flat rate of 20% on your taxable income. This also applies to resident capital companies (on the shares of non-Saudi partners) and nonresident persons with a permanent establishment in the Kingdom. This is established under Article 7 of the Saudi Income Tax Law.

Your taxable income includes all revenues, profits, and gains of any type resulting from carrying out your activity, including capital gains and incidental income, as defined in Article 8. It is important to note that this tax applies specifically to your business income — not to employment salary income, which falls under a different regime (GOSI contributions for Saudis, with expats generally not subject to income tax on salaries).

Practically speaking, if you operate as a sole trader or freelancer in the Kingdom, you should register with the Zakat, Tax and Customs Authority (ZATCA) and file annual returns. Keeping clear records of all business revenues and allowable expenses will help you accurately calculate your 20% tax liability.