Do You Have to File Taxes As An American Living in Saudi Arabia

The Kingdom of Saudi Arabia is a destination for tourists and home to many expats who have made it their permanent residence. The opportunities and favorable tax structures have made these desirable nations destinations from around the globe, with Saudi Arabia being no exception! Even if you have a favorable tax structure in your host country, the U.S. expat taxes may affect you, and this is just one reason why it’s important to understand filing obligations as required by Saudi law.

U.S. Expat Taxes In Saudi Arabia

To maintain your citizenship or permanent resident status in the United States, you must file taxes with the IRS each year. This includes expats who live abroad but work here as well. You could be required to file an informational return on your assets held in foreign bank accounts with the FBAR Form 114 and 8938 Statement of Specified Foreign Financial Assets.

The United States is one of few governments that tax international incomes for its citizens and permanent residents who reside overseas. However, there are special provisions to protect them from double taxation like the following:

  • The U.S. expat tax credit allows you to offset your taxes in the host country with those paid at home. This is done dollar for dollar, and it can be one way of dealing with surprise bills from abroad.
  • The foreign housing exclusion allows you to exclude certain household expenses that occur due to living abroad.

If you are looking to eliminate or minimize your U.S. expat taxes, it is crucial that proper planning be done. Additionally, even if you think that your U.S. Expat Taxes won’t end up owing anything to the IRS due to the taxes being filed for abroad with no income earned in America during the time period, it’s likely still necessary by law.

Saudi Arabia Income Tax

In the Kingdom of Saudi Arabia, there is no taxes on income earned from employment of any nationality. Furthermore, investment or capital gains from business activities such as trading stocks and bonds may be taxed at ( General Authority of Zakat and Tax ) of 2.5% as a Saudi national only, but if you are a non-Saudi Citizen, you will be taxed around twenty percent.

Who Is Considered To Be A Resident of Saudi Arabia?

Saudi Arabia is a country that grants residency through resident permits. To be considered, one must have an Iqama Card, by having such working visa which can only be obtained at their local embassy of your country.

Tax Date In Saudi Arabia

The Department of Zakat and Income Tax does not require a tax return from individuals work income in Saudi Arabia. There is no need for them to file any forms with the government, nor do they have an annual due date or specific time frame.

Social Security In Saudi Arabia

As a Saudi, the social security system in Saudi Arabia covers both private-sector and some public-sector workers. Voluntary coverage is available for the self-employed or no longer fits the requirements of compulsory coverage. 

This coverage is paid for by an insured pension that takes 9% of gross earnings. For self-employed, the rate will increase up to 18%. In addition, if you have a dual citizen you may have access to U.S. Social Security or Saudi social security, depending on your situation.

Is Foreign Income From Employment Taxed Within Saudi Arabia

In Saudi Arabia, Employment income is not taxed regardless of the amount you earned.

The US-Saudi Tax Treaty

US Citizen Expatriates subject to taxation in Saudi Arabia and their home country may find themselves at a disadvantage.  The United States disagrees with this particular nation, so if you are in a country that has income tax, you’ll need two different sets of tax information for each set of residence or business records- which can be pretty time-consuming.

Other Taxes in Saudi Arabia

The Kingdom of Saudi Arabia is one of the most attractive nations to live in. There Are no taxes on property which makes it an all-around great place for people looking into moving abroad, while also being among some of the lowest taxed countries on earth means you won’t need to worry about paying more than what’s fair with your paycheck each month.

Saving on U.S. Expat Taxes

Saudi Arabia is a great country for those looking to live the lifestyle of royalty. With its more controlled growth and attractive tax regime, you will be able to enjoy life as much as possible without worrying about U.S. expat taxes since your home rent can be deducted from your return when working internationally.

Have questions about your U.S. expat taxes and how they will be affected by living in a low-tax area like Saudi Arabia? Speak to an expert now. Khaled Alaboudi is a trusted Tax Preparer in Riyadh, Saudi Arabia. He assists both individuals and small businesses with their taxes – local or international clients alike. Furthermore, he is an IRS Certifying Acceptance Agent, in Saudi Arabia, Mr. Khaled Alaboudi can help individuals apply for an ITIN.

Khaled Alaboudi

U.S Tax Global Service LLC is an experienced company that helps individuals and businesses prepare their taxes correctly, accurately, and efficiently. The team can handle all your needs, big or small, tax preparation. They can provide you with a variety of tax preparation software packages designed for individuals living abroad and information on claiming the foreign earned income exclusion.

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