Taxes in Saudi Arabia for Expats: Complete 2025 Guide
Saudi Arabia is one of the world’s leading expatriate destinations, especially for professionals from Asia, Europe, and other Gulf Cooperation Council (GCC) states. With high salaries, tax-friendly policies, and a booming economy under Vision 2030, the Kingdom continues to attract millions of expatriates.
However, while Saudi Arabia does not levy personal income tax on salaries, expats are still subject to mandatory fees, and consumption-based levies. Understanding these obligations is critical for compliance, financial planning, and avoiding penalties.
Do Expats Pay Income Tax in Saudi Arabia?
Saudi Arabia is unique compared to most countries because there is no personal income tax on employment income. Expatriates working under an employment contract do not have deductions from their salaries for income tax.
This is one of the biggest incentives for professionals moving to the Kingdom. Still, this doesn’t mean expatriates are completely tax-free—other taxes and fees apply.
Types of Taxes and Fees for Expats in Saudi Arabia
1. Value Added Tax (VAT) in Saudi Arabia
- Rate: 15% (as of July 2020)
- Scope: Applies to most goods and services purchased in the Kingdom.
- Exemptions/Zero-rated: Certain financial services, international transport, and some basic services.
Expats pay VAT every time they purchase goods or services. Businesses collect VAT on behalf of the Zakat, Tax, and Customs Authority (ZATCA).
3. Dependent (Expat) Fees in Saudi Arabia
- Amount: SAR 400 per dependent per month (as of 2025)
- Applicability: Paid by expatriates sponsoring family members (spouse, children).
- Payment: Through the Absher platform or SADAD bills.
This is one of the biggest recurring costs for expatriates with families in Saudi Arabia and usually Saudi companies covers this cost , if you have been awarded with family status employment contract
4. Employer Work Permit Levy (Maktab Amal Levy) in Saudi Arabia
- Paid by the employer for each foreign worker.
- Approx. SAR 700–800 per month, depending on Saudization ratios.
- While not directly deducted from the employee’s salary, it affects hiring policies and renewals.
5. Customs Duty & Import VAT in Saudi Arabia
When importing goods:
- Customs duty varies (commonly 5–20%) depending on the product.
- VAT at 15% applies to the CIF value (Cost + Insurance + Freight).
Example: Importing electronics often attracts both customs duty and VAT.
6. Withholding Tax in Saudi Arabia
Applies only if an expat earns non-employment Saudi-source income (e.g., royalties, independent services). Employees on standard contracts usually don’t face this.
How to Calculate Taxes in Saudi Arabia as an Expat in Saudi Arabia
Let’s look at real-life scenarios:
Example 1: Monthly VAT on Shopping
- Grocery basket = SAR 2,000 (pre-VAT)
- VAT @ 15% = SAR 300
- Total = SAR 2,300
Example 2: Buying Excise Goods
- Soft drink case = SAR 40 base price
- Excise tax 50% = SAR 20 → SAR 60
- VAT 15% on SAR 60 = SAR 9
- Final Price = SAR 69
Example 3: Dependent Fee for Family
- Spouse + 2 children = 3 dependents
- Fee = SAR 400 × 3 = SAR 1,200/month
- Annual = SAR 14,400
Importing Goods in Saudi Arabia
- CIF value of electronics = SAR 3,750
- Customs duty (5%) = SAR 187.50
- VAT (15% on 3,937.50) = SAR 590.63
- Total tax payable = SAR 778 approx.
Why It’s Important to Pay Taxes and Fees in Saudi Arabia
- Legal Compliance – Non-payment can block Iqama renewals, result in penalties, or restrict travel.
- Residency Validity – Dependent and employer levies are tied to Iqama renewals.
- Consumer Protection – VAT invoices ensure transparent pricing and protect buyers.
- Border Security – Proper customs declarations prevent fines and confiscations.
- Contribution to National Development – Taxes support infrastructure, healthcare, and Vision 2030 reforms.
Frequently Asked Questions
Q: Do expats file annual tax returns in Saudi Arabia?
No. If your income is only employment-based, you don’t need to file personal tax returns.
Q: Can expats get VAT refunds?
No. VAT refunds are available only for tourists (short visits), not resident expatriates.
Q: Do dependent fees ever change?
Yes. Past years saw adjustments. Always confirm on Absher for the latest fee.
Q: What happens if dependent fees aren’t paid?
Your dependents’ Iqama will not renew, leading to fines and possible deportation issues.
Conclusion
For expatriates, Saudi Arabia remains an attractive destination due to its zero income tax on salaries. However, expats must still account for VAT, excise tax, dependent fees, customs/import taxes, and employer levies. which are not massive and most of the time employers covers the levy taxes.
Paying these taxes and fees is essential for:
- Maintaining legal residency
- Avoiding penalties
- Ensuring compliance with Saudi laws
Understanding the structure of these charges and planning your budget accordingly can help you make the most of your tax-free salary advantage.
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