Resident entities are subject to tax on income from all sources, unless specifically exempt, after allowable deductions. Taxable income is generally determined through audited financial statements as adjusted for diverging tax rules. In specific cases, taxable income may be determined on a presumptive basis.

The tax base is restricted to the share of non-Saudi and non-GCC shareholders. The share of profits corresponding to the interests held by Saudi and GCC holders is not subject to profit tax. Instead, the interest held by Saudi and GCC holders is subject to a separate (religious) levy called Zakat, with its own separate tax base. However, if this tax base is lower than the tax base for profit tax as described above, then Zakat will be levied on the higher profit tax base.

From 1 January 2017, resident capital companies including joint-stock companies and limited liability companies are also subject to profit tax and are not subject to Zakat, if they are owned, directly or indirectly, by non-Saudi persons or by persons operating in oil or hydrocarbon production. Indirect ownership for tax purposes is considered up to two levels, i.e. one intermediary. However, an exemption is provided to companies held by non-Saudi persons that are engaged in oil and hydrocarbon production and are listed on the Saudi Stock Exchange.

The tax base is determined separately from the tax base of its shareholders, partners, or affiliated companies, even if consolidated for financial reporting purposes. Affiliated companies are defined as those in which a parent company has at least 50% equity ownership or has control over the appointment of its board of directors.

Companies engaged in natural gas investment and the production of oil and hydrocarbons are required to compute the tax base of each of these activities independently, after claiming allowable deductions, with the total tax payable equal to the sum of the tax due on the two bases. For this purpose, natural gas investment activities are defined as including exploration and production of non-associated natural gas, including gas condensers, as well as the business of assembling, purifying, processing, retailing, and transporting associated and non-associated natural gas and their liquids, gas condensates, and other associated elements. Further, income from natural gas investment activities includes total income from the sale, exchange or conversion of natural gas and its liquids and condensates, and any other income the taxpayer earns from an incidental or non-operating source related to its principal activity, including income from the exploitation of surplus capacity in one of the facilities of natural gas investment activity.

A capital company's share of profits or losses from investments accounted for in accordance with the equity method is not included in the tax base. The Saudi-source income of a resident capital company includes income from its operations and the operations of its branches, inside or outside of Saudi Arabia.

Effective from 2018, dividends received by a Saudi resident company from a foreign or resident company are exempt from tax, if the ownership in the paying company is 10% or more, for a period of at least one year (see Sec. 10.1.).

Effective from 2018, intragroup transfers of assets including cash, shares, financial securities, and other tangible and intangible assets are tax neutral, subject to certain conditions (see Sec. 11.).

Capital gains arising from the disposal of immovable property, disposal of operating assets, and alienation of shares in a resident company are subject to tax. However, capital gains arising from the alienation of shares listed on the Saudi Stock Exchange are exempt from tax, if the alienation is in compliance with the Capital Market Laws and the shares alienated (including any stock dividend received on such shareholding) were acquired after 30 July 2004. Effective from 2018, the exemption is also applicable to gains from the alienation of shares listed on foreign stock exchanges, if the shares alienated were acquired after 30 July 2004 and are also listed on the Saudi Stock Exchange.

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