Understanding the accounting requirements for Saudi companies helps business owners maintain reliable records, prepare financial statements and meet filing deadlines.

However, the requirements vary. Your company’s legal structure, ownership, size and activities affect its accounting, audit and tax obligations. A small Saudi company may qualify for an audit exemption, while a foreign company branch faces different rules.

This guide explains the main requirements, including Saudi accounting standards, VAT, Zakat, financial statement filing and ZATCA e-invoicing. It also covers a 2026 update that smaller VAT-registered businesses should review before 2027.

What Are the Main Accounting Requirements for Saudi Companies?

Saudi companies generally need to:

• Maintain accounting records and supporting documents.
• Prepare annual financial statements under standards approved in Saudi Arabia.
• Appoint an independent, Saudi-licensed auditor when required.
• Deposit financial statements within the applicable statutory deadline.
• Meet relevant VAT, Zakat, income tax and e-invoicing obligations.
• Retain records for the required periods.

Article 17 of the Saudi Companies Law establishes the accounting record and annual financial statement obligations. It also sets a general filing deadline of six months after the financial year ends.

Start by identifying which rules apply to your company. Then assign responsibility for bookkeeping, tax returns, financial reporting and filing.

1. Maintain Accurate Accounting Records

Good compliance starts with complete records throughout the year. Waiting until a filing deadline makes missing invoices and unexplained balances harder to resolve.

A practical bookkeeping system should include:

• A chart of accounts and general ledger.
• Sales invoices, purchase invoices and credit notes.
• Bank statements and reconciliations.
• Customer receivable and supplier payable schedules.
• Inventory records, where relevant.
• A fixed-asset register.
• Payroll records and employee benefit calculations.
• Contracts, loan agreements and related-party transaction records.

For example, a bank payment alone may not explain an expense. Keep the supplier invoice, supporting agreement and payment reference together.

Arabic records and electronic bookkeeping

The Law of Commercial Books requires commercial books within its scope to be maintained in Arabic. It also permits electronic storage subject to the applicable accuracy and security requirements.

Therefore, choose accounting software that supports your Arabic recordkeeping obligations. Also check whether staff can retrieve supporting documents quickly.

Practical step: Close your books monthly. Reconcile bank accounts, review overdue invoices and resolve unusual transactions before they accumulate.

For ongoing support, explore our accounting and bookkeeping services.

2. Apply the Correct Saudi Accounting Standards

Saudi Arabia uses International Financial Reporting Standards endorsed locally by the Saudi Organization for Chartered and Professional Accountants, or SOCPA.

The appropriate framework depends on the entity.

Full IFRS for publicly accountable entities

Publicly accountable entities must apply IFRS Accounting Standards endorsed in Saudi Arabia, together with relevant SOCPA standards and pronouncements.

Consequently, an international reporting package may need additional work to meet Saudi reporting requirements.

IFRS for SMEs for eligible entities

Eligible entities without public accountability use the Saudi-endorsed IFRS for SMEs framework. They may choose full Saudi-endorsed IFRS subject to the applicable conditions.

The IFRS Foundation’s Saudi Arabia profile explains these requirements. It also clarifies that an SME choosing full IFRS must apply it in full, rather than select individual standards.

Practical step: Confirm your reporting framework before preparing the annual accounts. Do not assume that qualifying for an audit exemption automatically determines your accounting framework.

3. Prepare Complete Annual Financial Statements

Financial statements explain your company’s performance, financial position and cash movements. A profit-and-loss report alone usually does not provide a complete reporting package.

Under full IFRS, a complete annual set generally includes:

• A statement of financial position, commonly called a balance sheet.
• A statement of profit or loss and other comprehensive income.
• A statement of changes in equity.
• A statement of cash flows.
• Notes, including material accounting policy information.
• Required comparative information.

The precise presentation depends on the applicable framework and circumstances. The IFRS Foundation’s IAS 1 overview explains the full-IFRS requirements.

Before finalising the accounts, review:

• Accruals and prepayments.
• Depreciation and asset disposals.
• Inventory quantities and valuation.
• Receivable recoverability.
• Employee benefit obligations.
• Related-party balances.
• Zakat and tax calculations.

These reviews help connect the year-end accounts to the transactions recorded during the year.

4. Check Saudi Company Audit Requirements

Many companies must appoint an auditor licensed to practise in Saudi Arabia. However, not every small company requires a statutory audit.

Audit exemption criteria for micro and small companies

The Ministry of Commerce identifies three size criteria:

Criterion	Threshold
Annual revenue	No more than SAR 10 million
Total assets	No more than SAR 10 million
Employees	No more than 49

A company must meet at least two of these three criteria to satisfy the size test. However, other conditions and exclusions also apply. The Ministry explains the thresholds in its small-business guidance.

When meeting the thresholds is insufficient

Article 19 includes exclusions involving listed companies, foreign companies, certain securities issuers and some parent–subsidiary structures. An audit may also be required by other laws or the company’s constitutional documents.

Shareholders or partners holding at least 10% of the relevant interests or voting shares may request an auditor under the prescribed rules. The law also addresses qualification in the first financial year or across two consecutive years.

Before claiming an exemption, check the full eligibility conditions and required management declaration.

An audit exemption does not remove the obligation to prepare and file financial statements.

5. Separate Financial Statement Filing From Tax Deadlines

One common mistake is treating all annual compliance deadlines as the same date.

They are separate obligations:

Obligation	General timing
Financial statement deposit	Within six months after financial year-end
Zakat and income tax returns, where applicable	Within 120 days after financial year-end
VAT return and payment	By the last day of the month following the tax period

The Ministry of Commerce directs companies to deposit statements electronically through Qawaem. ZATCA separately confirms the 120-day deadline for annual Zakat and income tax returns. Its VAT guidance sets the return and payment deadline after each tax period.

For example, a company with a 31 December 2026 year-end would ordinarily have a 30 June 2027 financial statement filing deadline. Its 120-day tax return deadline arrives earlier.

Listed and regulated businesses may also face additional reporting deadlines.

Practical step: Maintain separate calendar entries for financial statement approval, audit completion, Qawaem filing and tax submissions.

6. Meet Saudi VAT Accounting Requirements

VAT registration and the standard rate

For resident businesses, mandatory VAT registration generally applies when taxable supplies exceed SAR 375,000 over the previous 12 months, or are expected to exceed that threshold over the next 12 months.

Voluntary registration may be available from SAR 187,500, subject to the relevant conditions. Saudi Arabia’s standard VAT rate is 15%, although zero-rated and exempt treatments apply to certain transactions.

Assess the threshold using the VAT rules. Do not assume every receipt or accounting revenue item receives identical treatment.

VAT returns and reconciliations

ZATCA’s guidance states that monthly periods apply to taxpayers with annual turnover exceeding SAR 40 million. The standard period for other VAT-registered persons is quarterly, subject to applicable rules.

Before filing each return:

• Reconcile sales records with output VAT.
• Check purchase invoices supporting input VAT deductions.
• Review credit notes and adjustments.
• Identify relevant imports and reverse-charge transactions.
• Explain differences between VAT returns and accounting revenue.

For help with registration or return preparation, visit our Saudi VAT compliance services.

7. Follow ZATCA E-Invoicing Requirements

ZATCA’s e-invoicing programme, commonly called Fatoora, has two phases.

Phase 1: Generation and storage

Phase 1 requires businesses within scope to generate and retain invoices through a compliant electronic solution.

A scanned paper invoice or an invoice created in a word processor does not meet the requirements merely because it is electronic.

Phase 2: Integration

Phase 2 adds integration with ZATCA’s systems, prescribed invoice formats and additional technical requirements.

It applies in waves. ZATCA notifies targeted taxpayers at least six months before their integration date. Non-resident taxable persons are excluded from the e-invoicing scope described in ZATCA’s guidance.

2026 update: E-invoicing Wave 25

On 24 July 2026, ZATCA announced Wave 25 for taxpayers whose VAT-subject revenues exceeded SAR 187,500 in any of 2022, 2023, 2024 or 2025.

The announcement identifies 1 February 2027 as the integration date for targeted taxpayers. Review your direct ZATCA notification to confirm your company’s obligation.

This wave threshold does not replace the mandatory VAT registration threshold.

If your company is targeted, ask your software provider to confirm:

• Integration readiness.
• Support for the invoice types you issue.
• Required invoice fields and QR codes.
• Invoice submission and error-handling procedures.
• Secure storage and retrieval.

Use ZATCA’s official e-invoicing guidance when assessing your system.

8. Review Zakat, Income Tax and Related-Party Transactions

Zakat and corporate income tax

Ownership affects how these obligations apply.

Broadly, qualifying Saudi/GCC ownership interests fall within Zakat, while non-Saudi ownership interests may fall within corporate income tax. Mixed-ownership companies can therefore have both obligations.

The standard corporate income tax rate is generally 20% of the relevant taxable income, with exceptions and sector-specific rules. Zakat uses a separate calculation framework; it should not be treated as a simple percentage of accounting profit.

Maintain a clear reconciliation from accounting results to the applicable tax or Zakat calculation.

Also review payments to non-residents for potential withholding tax obligations.

Transfer pricing documentation

Transactions with related parties require attention even when they occur within the same business group.

ZATCA’s transfer pricing rules apply the arm’s-length principle. Documentation requirements depend on the taxpayer’s category and transaction values.

For Zakat payers, the phased framework includes mandatory master-file and local-file requirements at SAR 100 million or more in related-party transactions during the first phase. The second phase begins three years after the 2024 start, with a threshold of more than SAR 48 million.

Therefore, review your position before 2027. Do not assume an exemption from these files removes every related-party disclosure obligation.

9. Retain Accounting Records for the Correct Period

Record retention forms an essential part of the accounting requirements for Saudi companies.

Different rules apply to different documents:

Record category	General retention requirement
Commercial books and supporting documents covered by the Commercial Books Law	At least 10 years
VAT invoices, books and accounting documents	At least six years from the end of the relevant tax period
VAT capital-asset records	The applicable adjustment period plus five years

These requirements appear in the Commercial Books Law and VAT Implementing Regulations. VAT records must also meet the applicable Arabic-language requirements.

Where multiple rules cover the same document, retain it for the longest applicable period. Also check record-location, access and electronic-storage requirements before selecting a cloud archive.

Practical step: Create a retention schedule by document type. Test backups and retrieval regularly.

A Practical Saudi Accounting Compliance Checklist

Use this checklist to turn the requirements into a routine.

Every month

• Record sales, purchases and expenses.
• Reconcile bank accounts and payment gateways.
• Review customer and supplier balances.
• Reconcile payroll and relevant GOSI contributions.
• Update employee benefit accruals.
• Check e-invoice errors and missing documents.

Each VAT period

• Reconcile VAT balances.
• Review invoices, credit notes and adjustments.
• Submit the return and pay the amount due.
• Save the supporting reconciliation and submission receipt.

Before and after year-end

• Confirm the applicable accounting framework.
• Review audit requirements or exemption eligibility.
• Complete inventory and asset checks.
• Prepare annual financial statements.
• Complete the audit when required.
• Prepare Zakat and income tax returns.
• Review related-party disclosures.
• Deposit financial statements within the applicable deadline.

Assign an owner and an internal completion date to each task. This makes delays visible while there is still time to resolve them.

Frequently Asked Questions

How long is a Saudi company’s financial year?

The normal financial year is 12 months. Under Article 16 of the Companies Law, the first year may run from six to 18 months from commercial registration.

Are all Saudi LLCs required to have an audit?

No. An eligible micro or small LLC may qualify for an exemption. However, it must satisfy the size test, qualification rules and other conditions. Check the company’s ownership structure, constitutional documents and shareholder requests before relying on an exemption.

Is six months the deadline for every annual filing?

No. Financial statement deposits and annual tax returns follow different timelines. Budget for the generally earlier 120-day Zakat or income tax deadline, where applicable.

Put Your Saudi Accounting Requirements Into Practice

Meeting the accounting requirements for Saudi companies starts with accurate monthly records and a clear compliance calendar.

First, confirm your accounting framework and audit position. Next, review VAT, Zakat, income tax and e-invoicing obligations. Finally, assign responsibility for each filing and retain the evidence supporting it.

Need help identifying gaps in your company’s accounting process?

Book an accounting compliance consultation. Review your bookkeeping, reporting deadlines and ZATCA obligations, then build a practical plan for your next financial year.