TaxSavvySA

Zakat or income tax for a 60 to 40 Indian and Saudi company

ZATCA asks Zakat or tax. We are 60 percent Indian and 40 percent Saudi. Which one?

The situation

Both. The 60 percent foreign share pays income tax at 20 percent of adjusted profit and the 40 percent Saudi share pays Zakat.

The law

  • Income Tax Law and Zakat Regulation, mixed ownership: Non-Saudi, non-GCC share pays 20 percent income tax; Saudi and GCC share pays Zakat
  • Income Tax Law (Royal Decree M/1 of 1425H), corporate income tax: 20 percent on net adjusted profits of the non-Saudi, non-GCC share

What it means for you

Register the company for both types so the annual return can split them. Example: profit SAR 800,000: tax 20 percent x 480,000 = SAR 96,000. Zakat is computed on the Saudi share of the Zakat base. Getting this wrong at registration causes wrong returns later.

What to do

  1. Enter shareholder nationalities correctly on ZATCA.
  2. Confirm both Zakat and income tax show on the profile.
  3. Plan audited statements for the return.

We can do this for youAfter the CR: register with ZATCA, GOSI, Qiwa, Muqeem and Mudad and set the first compliance calendar: SAR 3,500

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