Corporate Tax, VAT and Withholding Tax Across the GCC: A Practical Comparison

A GCC corporate tax comparison can look simple when it is reduced to six headline rates. In practice, the result depends on much more. Ownership, taxable presence, business activity, VAT registration, cross-border payments, customs, free-zone conditions and filing duties can all change the real cost.

This guide compares the United Arab Emirates, Saudi Arabia, Qatar, Oman, Kuwait and Bahrain. It focuses on ordinary business taxation, not only large multinational groups. It also separates corporate income tax, Zakat, VAT, withholding tax and contract-retention rules.

The rules were reviewed on 5 August 2026. Tax laws, executive regulations and electronic filing systems can change. Always confirm the live position before a transaction, filing or investment decision.

GCC tax comparison at a glance

Country	Ordinary direct-tax position	Standard VAT	Cross-border withholding position	Large-group minimum tax
United Arab Emirates	0% on taxable income up to AED 375,000 and 9% above it. Special rules apply to Qualifying Free Zone Persons.	5%	0% withholding tax under the federal corporate tax system.	DMTT applies to qualifying multinational groups for financial years starting from 1 January 2025.
Saudi Arabia	Generally 20% corporate income tax on the non-Saudi/non-GCC ownership share. Saudi/GCC ownership is generally within the Zakat system.	15%	Different rates commonly range from 5% to 20%, depending on the payment.	Do not assume another GCC country’s Pillar Two rules apply. Confirm the current Saudi framework for the group.
Qatar	Generally 10% on Qatar-source taxable income within the state tax regime.	Not in force as of the review date.	Generally 5% on specified payments to non-residents without a Qatar permanent establishment.	IIR and DMTT apply for qualifying multinational groups for financial years starting from 1 January 2025.
Oman	15% standard income tax. A 3% rate can apply to a qualifying small enterprise that meets all statutory conditions.	5%	10% on listed Oman-source payments to certain foreign persons without an Oman permanent establishment, subject to current law, relief and treaty treatment.	Oman’s supplementary tax framework applies to qualifying multinational-group entities from 2025.
Kuwait	Generally 15% on foreign corporate bodies carrying on business in Kuwait. Local-equity assessments and other contributions can follow separate rules.	Not in force as of the review date.	No conventional broad withholding schedule, but a 5% contract-retention mechanism can affect foreign contractors.	DMTT applies to qualifying multinational groups from 1 January 2025.
Bahrain	Generally no broad corporate income tax for ordinary non-hydrocarbon business. Sector-specific rules still matter.	10%	Generally 0%.	DMTT applies to qualifying multinational groups for financial years starting from 1 January 2025.

1. Corporate income tax and Zakat

United Arab Emirates

The UAE federal corporate tax regime uses a 0% rate on taxable income up to AED 375,000 and a 9% rate on the amount above that threshold. This is a taxable-income threshold, not a revenue threshold.

A Free Zone entity does not receive 0% tax merely because its licence is issued in a Free Zone. A Qualifying Free Zone Person must meet legal conditions, maintain adequate substance and separate qualifying income from income taxed at 9%.

Saudi Arabia

Saudi Arabia separates foreign ownership from Saudi and qualifying GCC ownership. The non-Saudi/non-GCC share is generally subject to corporate income tax at 20%. The Saudi/GCC share is generally assessed under the Zakat system.

Zakat should not be treated as a simple percentage of accounting profit. It has its own base, adjustments and filing rules. A mixed-ownership company may therefore have both income-tax and Zakat calculations.

Qatar

Qatar generally applies a 10% income tax rate to Qatar-source taxable income under the state tax regime. Ownership and the legal route can affect the taxable share. The Qatar Financial Centre and Qatar Free Zones have separate frameworks and conditions.

Oman

Oman’s standard income-tax rate is 15% for an Omani establishment, company or permanent establishment. The standard rate is not divided according to foreign and Omani ownership.

A 3% rate can apply to a qualifying small enterprise. The Tax Authority lists cumulative conditions, including limits on registered capital, annual gross income and employee numbers, and an exclusion for certain professional activities. Missing one condition can move the business to the standard regime.

Kuwait

Kuwait generally applies a 15% income-tax rate to foreign corporate bodies carrying on business in Kuwait. Contract performance, agency arrangements and Kuwait-source income can create exposure even when part of the work is performed outside Kuwait.

Kuwaiti and GCC ownership can be subject to different local assessments or contributions. These should not be combined with foreign corporate income tax as if they were one rate.

Bahrain

Bahrain generally does not impose a broad corporate income tax on ordinary non-hydrocarbon commercial activity. This does not mean that every business has no tax or reporting exposure. VAT, excise, customs, payroll-related duties, sector rules and the DMTT for large multinational groups can still apply.

In December 2025, Bahrain announced a proposed 10% tax on the profits of certain local companies, targeted for 2027 and subject to the legislative process. It is not treated as an enacted 2026 tax in this comparison.

2. VAT rates and registration thresholds

Four GCC countries currently operate VAT. Qatar and Kuwait had not brought a general VAT system into force by 5 August 2026. A country without VAT can still have excise tax, customs duties and other indirect taxes.

Country	Standard VAT rate	Common mandatory registration threshold	Practical point
United Arab Emirates	5%	AED 375,000	Test taxable supplies and imports over the required rolling period. Voluntary registration has a lower threshold.
Saudi Arabia	15%	SAR 375,000	High-rate VAT can materially affect pricing, cash flow and contract wording.
Oman	5%	OMR 38,500	Voluntary registration is generally available from OMR 19,250, subject to the rules.
Bahrain	10%	BHD 37,500	Voluntary registration is generally available from BHD 18,750.
Qatar	Not in force	Not applicable	Do not build a long-term model on the assumption that VAT will never be introduced.
Kuwait	Not in force	Not applicable	Customs and other charges still need a separate review.

The registration threshold is only the first test. A business must also classify supplies as standard-rated, zero-rated, exempt or outside scope. It must check place-of-supply rules, reverse charge, imports, exports, bad debts, credit notes and input-tax recovery.

A foreign business can sometimes have a registration duty without a local company or without reaching the normal resident threshold. Non-resident rules must therefore be checked separately.

3. Withholding tax and contract retention

Withholding tax is normally deducted by the payer from a payment to a non-resident. Contract retention is different. It can require part of an invoice to be held until the foreign contractor provides tax clearance.

Country	General position	Main risk for an SME
United Arab Emirates	The federal corporate tax withholding rate is 0%.	A 0% rate does not remove transfer-pricing, permanent-establishment or documentation questions.
Saudi Arabia	Rates commonly range from 5% to 20%. Dividends and interest are commonly 5%, royalties 15%, and service rates depend on the category and relationship.	A contract price can become uneconomic when the parties do not state whether the fee is gross or net of withholding tax.
Qatar	Generally 5% on specified payments to non-residents for services, royalties, interest, commissions and similar items when not connected to a Qatar permanent establishment.	The payer may need to deduct tax even when part of the service is performed outside Qatar but used or benefited in Qatar.
Oman	10% on listed Oman-source payments to certain foreign persons without an Oman permanent establishment.	The payment category, treaty, beneficial ownership, place of use and current administrative treatment must be checked before payment.
Kuwait	No broad conventional withholding schedule, but a 5% tax-retention mechanism can apply to contract payments involving foreign contractors.	Cash can remain blocked until tax clearance is obtained.
Bahrain	Generally 0% withholding tax.	VAT, economic substance, permanent establishment and foreign-country tax can still matter.

4. Free zones and special economic zones

“Free zone” is a location and legal framework. It is not a complete tax answer. A zone incentive may depend on qualifying activity, export level, substance, approved investment, employment, accounting, related-party pricing and the movement of goods into the mainland.

• UAE: a Qualifying Free Zone Person can receive 0% on qualifying income, while non-qualifying taxable income can be taxed at 9%.
• Qatar: the Qatar Free Zones framework can offer long tax-holiday periods, but the entity, activity and approval conditions matter.
• Oman: special zones and free zones can offer income-tax and customs incentives under their legal frameworks and agreements. VAT treatment also follows special-zone conditions.
• Kuwait: approved direct-investment projects can receive incentives, but they are not automatic for every company.
• Saudi Arabia and Bahrain: sector, location and investment programmes can create incentives, but they require a programme-specific review.

For an Oman project, a free-zone investment assessment in Oman should compare tax benefits with land, logistics, staffing, customs, domestic sales and real operating needs.

5. Customs, imports and indirect tax

The GCC Customs Union uses a common external tariff of 5% for many foreign goods imported from outside the customs union. This is not a universal rate for every product. Exemptions, protective duties, anti-dumping measures, excise goods and product-specific rules can change the amount.

The correct calculation starts with the HS code, customs value, origin, importer of record and destination. VAT or import tax may then apply on top of the customs value and duty. Moving goods from a free zone into the mainland can also create a new customs or VAT event.

Preferential origin under a trade agreement is not automatic. The product must meet the relevant origin rule and the exporter must hold the required evidence. For Oman routes, review the applicable trade agreement and origin rule before building a tariff saving into the business model.

6. SME relief and exemptions

Small-business relief is not the same across the GCC.

• UAE: eligible resident persons with revenue not exceeding AED 3 million can elect for Small Business Relief for eligible tax periods. It is time-limited, and a Qualifying Free Zone Person or an in-scope large multinational group cannot use it.
• Oman: the 3% rate requires all statutory conditions to be met. It is not a general first-year discount.
• Other GCC states: exemptions may depend on ownership, sector, investment approval, location or legal form. Do not assume that a low turnover automatically creates a reduced corporate tax rate.

Even where taxable profit is low or an exemption applies, bookkeeping, registration and filing may still be required.

7. Pillar Two and domestic minimum top-up tax

Pillar Two is designed for large multinational enterprise groups, generally where consolidated annual revenue is at least EUR 750 million in at least two of the previous four financial years. It is not a new 15% tax on every GCC company.

Country	Position reviewed on 5 August 2026
United Arab Emirates	Domestic Minimum Top-up Tax applies for financial years starting on or after 1 January 2025 for in-scope groups.
Qatar	Income Inclusion Rule and Domestic Minimum Top-up Tax apply for financial years starting on or after 1 January 2025.
Oman	A supplementary tax law for entities belonging to multinational groups applies from 2025. The exact group structure and rule order must be reviewed.
Kuwait	Domestic Minimum Top-up Tax applies from 1 January 2025 for qualifying multinational groups.
Bahrain	Domestic Minimum Top-up Tax applies for financial years starting on or after 1 January 2025.
Saudi Arabia	Confirm the current Saudi implementation position for the group. Do not import another country’s filing assumption into Saudi Arabia.

A local tax holiday can still have value, but it may not reduce the group’s final effective tax below 15% when another jurisdiction applies an IIR, UTPR or qualified domestic top-up tax. Large groups need jurisdiction-by-jurisdiction data, deferred-tax work, safe-harbour tests and a coordinated filing calendar.

8. Owner and executive tax considerations

Company tax and owner-level tax must be separated. A company can owe corporate tax even when the shareholder has no personal income tax. A shareholder can also face tax in another country because of personal tax residence, controlled-foreign-company rules or remittance rules.

Oman enacted a Personal Income Tax Law under Royal Decree 56/2025. It is scheduled to enter into force at the beginning of 2028. The announced rate is 5% on taxable income, with a high OMR 42,000 threshold and detailed rules for included income, deductions and exemptions.

This future Oman tax should not be added to a 2026 company-tax estimate as if it were already payable. It should, however, be considered in long-term remuneration and owner-residence planning.

9. Filing, accounting and audit

A tax rate is useful only when the business can meet the compliance system behind it. Common duties include tax registration, annual corporate returns, VAT returns, withholding filings, transfer-pricing records, financial statements and payment deadlines.

Country	Common corporate filing point	Accounting or audit warning
United Arab Emirates	Corporate tax returns are generally due within nine months after the end of the tax period.	Free-zone status, relief elections and related-party transactions require records even when tax payable is zero.
Saudi Arabia	Income-tax and Zakat returns are generally due within 120 days after the year end.	Mixed ownership needs correct allocation between income tax and Zakat.
Qatar	Income-tax returns are generally due within four months after the end of the accounting period.	Tax-card, contract and withholding duties may arise before the annual return.
Oman	Income-tax registration is generally required within 60 days from starting activity or registration. Annual returns follow the statutory filing calendar.	VAT, withholding tax and income tax have separate deadlines and should not be managed as one filing.
Kuwait	The annual declaration follows the statutory Ministry of Finance calendar. Confirm the current deadline in the electronic tax service.	Foreign contractors should plan for tax retention and clearance documents.
Bahrain	Ordinary non-oil companies may not have a general corporate income-tax return, but VAT, excise and DMTT obligations can apply.	A multinational group within DMTT needs a separate registration and compliance process.

A statutory audit is also separate from tax filing. It may be required by company law, a regulator, a free-zone authority, a bank, a shareholder agreement or a tax rule. A small company should not assume that “no audit requested yet” means no audit requirement exists.

10. Worked business scenarios

Business	Main tax questions	Why the headline rate is not enough
Consultancy serving GCC clients	Permanent establishment, place of supply, VAT registration, reverse charge and withholding on service fees.	A low-tax home company can still lose part of an invoice to client-country withholding or create taxable presence through people on the ground.
Regional trading company	Importer of record, customs value, HS code, VAT on imports, stock location and profit margin.	Customs and import VAT can require more cash than corporate tax during the first year.
Manufacturer	Land and zone incentive, machinery imports, raw-material duty, local-content rules, payroll and environmental approvals.	A tax holiday may be less valuable than logistics, utility or market-access costs.
Exporter	Zero-rating evidence, proof of export, input-tax recovery, origin rules and foreign distributor structure.	Zero-rated VAT can improve competitiveness but may create refund delays and documentation risk.
Large multinational group	Country effective tax rate, DMTT, IIR, transfer pricing, safe harbours and group data.	A local 0% incentive can be followed by top-up tax elsewhere under Pillar Two.

Example: a cross-border consultancy

Assume a consultancy is registered in Oman, has staff in Muscat and invoices clients in Saudi Arabia, Qatar and the UAE. The Oman company normally starts with Oman income-tax and VAT analysis. Each foreign client payment then needs a separate withholding and treaty review. Regular work at the client’s premises may also create a permanent establishment outside Oman.

The correct answer is not “Oman is 15%.” The full answer includes Oman taxable profit, VAT treatment, foreign withholding, treaty credit, payroll, travel pattern and the location where services are performed.

Example: a trading company

Assume a trading company imports goods from Asia and sells them in Oman and the UAE. It must identify the importer of record in each country, classify the goods, model customs duty, register for VAT where required and document intercompany pricing. A Free Zone can help with re-export logistics, but mainland sales may trigger customs and VAT.

11. Oman-specific compliance pathway

For an investor considering Business setup in Oman, tax should be designed after the activity and ownership model are clear, but before contracts and invoices begin.

1. Confirm the entity and activity. The commercial activity, regulator and operating location affect licences, tax and VAT treatment.
2. Register for income tax. Oman’s Tax Authority generally requires registration within 60 days from the start of activity or registration.
3. Test the correct income-tax rate. Do not use 3% unless every small-enterprise condition is met.
4. Monitor VAT from the beginning. Track taxable supplies against the OMR 38,500 mandatory threshold and review non-resident or voluntary registration where relevant.
5. Classify foreign payments before paying. Review royalties, software, research, management and service fees for withholding tax and treaty relief.
6. Keep accounting evidence. Maintain invoices, contracts, bank records, customs documents, payroll and related-party support.
7. File each tax separately. Income tax, VAT and withholding tax use different returns and deadlines.
8. Review changes annually. Re-test VAT thresholds, new activities, ownership, free-zone conditions, related parties and cross-border work.

Oman Verified provides tax registration and filing support in Oman for companies that need a structured compliance pathway. Complex transactions and multinational structures may require a formal tax opinion from the appropriate specialist; Oman Verified can coordinate that work as part of the wider Oman-side process.

12. Common mistakes

• Choosing a country only because its headline corporate tax rate is lower.
• Calling every Free Zone company “tax free.”
• Mixing Zakat, corporate tax, withholding tax and contract retention.
• Ignoring the ownership split in Saudi Arabia, Qatar or Kuwait.
• Waiting until the first VAT return to check the registration threshold.
• Assuming an offshore service cannot be subject to client-country withholding tax.
• Using a tax-treaty rate without a residence certificate, beneficial-ownership evidence or the required procedure.
• Treating Pillar Two as a rule for all small and medium businesses.
• Assuming a company with no profit has no filing duty.
• Ignoring operational disadvantages while focusing only on a tax incentive.

13. Practical tax checklist

• What legal entity will sign contracts and issue invoices?
• Who owns the entity, and does nationality change the tax base?
• Where are staff, management, stock, equipment and customers located?
• Can the business create a permanent establishment in another country?
• What is the expected taxable profit, not only revenue?
• Will taxable supplies exceed the VAT threshold?
• Who will be the importer of record, and what HS codes apply?
• Which payments will go to non-residents?
• How will profits be distributed or repatriated?
• Does a Free Zone incentive apply to the actual income?
• Is the company part of a group above the EUR 750 million Pillar Two threshold?
• Who owns the filing calendar, bookkeeping and audit process?

Frequently asked questions

Which GCC country has the lowest corporate tax?

Bahrain generally has no broad corporate income tax for ordinary non-hydrocarbon business. The UAE has a 0% band and a 9% standard rate above it. However, the lowest headline rate is not always the lowest total cost. VAT, customs, withholding tax, staffing, licence conditions and market access can be more important.

Is a GCC Free Zone company always tax free?

No. The incentive depends on the country, zone, activity, income type, substance and compliance. Mainland sales and non-qualifying income may be taxed. Pillar Two can also create top-up tax for a large multinational group.

Which GCC countries have VAT?

The UAE, Saudi Arabia, Oman and Bahrain have VAT. Qatar and Kuwait had not implemented a general VAT system by 5 August 2026.

Does Oman charge withholding tax on every foreign payment?

No. Oman withholding tax applies to listed Oman-source payment categories made to certain foreign persons without an Oman permanent establishment. The contract, payment type, treaty, beneficial owner and current administrative treatment must be checked.

Is Saudi Zakat the same as 2.5% corporate tax?

No. Zakat follows its own base and adjustments. It should not be calculated as a simple percentage of accounting profit. A mixed-ownership company can have both Zakat and corporate income tax exposure.

Do Qatar and Kuwait have VAT in 2026?

No general VAT system was in force in Qatar or Kuwait on the review date. Businesses should still monitor official announcements and budget for customs, excise and possible future implementation.

Does the 15% global minimum tax apply to an Oman SME?

Normally no. Pillar Two generally targets multinational enterprise groups with consolidated annual revenue of at least EUR 750 million in at least two of the previous four financial years.

Will Oman personal income tax apply in 2026?

No. Oman’s Personal Income Tax Law is scheduled to enter into force at the beginning of 2028. The announced rate is 5% on taxable income, with an OMR 42,000 threshold and detailed statutory rules.

Related Oman Verified guides and services

Conclusion

The six GCC countries do not form one tax system. They share economic links and a customs framework, but corporate tax, Zakat, VAT, withholding tax, incentives and filing rules remain country-specific.

For an ordinary investor, the best comparison is based on the same business assumptions: ownership, activity, staff, customers, profit, imports, cross-border payments and operating location. For a large multinational group, Pillar Two must be added as a separate layer.

Official sources

• UAE Federal Tax Authority — Corporate Tax
• UAE Ministry of Finance — Domestic Minimum Top-up Tax
• Saudi Zakat, Tax and Customs Authority — Income Tax
• Saudi Zakat, Tax and Customs Authority — VAT
• Qatar General Tax Authority — Tax Laws
• Qatar General Tax Authority — Global and Domestic Minimum Tax
• Oman Tax Authority — Tax Rates
• Oman Tax Authority — Registration
• Oman Tax Authority — Withholding Tax
• Oman Tax Authority — Income Tax Law and Regulations
• Oman Tax Authority — Personal Income Tax Law Announcement
• Kuwait Ministry of Finance — Domestic Minimum Top-up Tax
• Bahrain National Bureau for Revenue — VAT
• Bahrain National Bureau for Revenue — Domestic Minimum Top-up Tax
• GCC Secretariat — GCC Customs Union
• OECD — Pillar Two Central Record

Official public information reviewed on 5 August 2026. Confirm the current requirements in the live government systems before submission.