Dubai vs. Saudi Arabia: A Corporate Tax Comparison for Businesses



When considering where to establish or expand your business, understanding the corporate tax landscape is crucial. Here’s a comparison of corporate tax rates in Dubai and Saudi Arabia for a business with a revenue of 2,000,000 AED/SAR.

Dubai

As of June 2023, the UAE introduced a federal corporate tax. The rates are as follows:

  • 0% on taxable income up to 375,000 AED.
  • 9% on taxable income exceeding 375,000 AED[1][2].

For a business with a revenue of 2,000,000 AED, the taxable income exceeding 375,000 AED would be subject to a 9% tax rate.

Saudi Arabia

In Saudi Arabia, the corporate tax rate is:

  • 20% on net adjusted profits[3][4].

Additionally, businesses owned by Saudi or GCC nationals are subject to Zakat, an Islamic assessment, at a rate of 2.5% on the company’s Zakat base[3][4].

Comparison

  • Tax Rate: Dubai offers a lower corporate tax rate (9%) compared to Saudi Arabia (20%) for taxable income above 375,000 AED/SAR.
  • Additional Levies: Saudi Arabia imposes Zakat at 2.5%, which applies to Saudi and GCC nationals, adding an extra layer of financial consideration.

Conclusion

Choosing between Dubai and Saudi Arabia for your business operations involves weighing the lower corporate tax rate in Dubai against the additional Zakat levy in Saudi Arabia. Each location offers unique advantages, and the best choice depends on your specific business needs and strategic goals.

If you have any more questions or need further details, feel free to ask!


References




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