Income tax
In one sentenceA tax imposed on the taxable profits of a business; in the Kingdom it covers the shares of non-Saudi, non-GCC owners and the activities of non-residents.
Simply put
A business owned by Saudis or GCC nationals pays Zakat on their shares, one owned by foreigners pays income tax on their shares, and a mixed business pays both, each in proportion.
It is calculated on taxable profit after the adjustments set by the Income Tax Law and its Implementing Regulations, not on sales.
Example
A company 60% owned by a Saudi and 40% by a foreigner: Zakat is calculated on 60% of the Zakat base, and income tax is calculated on 40% of the taxable profit.
Don't confuse it with
ZakatZakat applies to the shares of Saudis and GCC nationals and is calculated on the base; income tax applies to the shares of others and is calculated on profit.
Value added taxVAT is on sales and borne by the consumer; income tax is on the business's profits.