Top 10 Accounting Requirements in Saudi Arabia for Setting Up a Company (2026 Guide)

Are you planning to set up a company in Saudi Arabia? Whether you are launching a new venture, expanding into the Kingdom, or establishing a regional headquarters, accounting compliance is important. The accounting and auditing profession in Saudi Arabia is governed by specific legal requirements and is overseen by professional organizations such as the Saudi Commission for Auditors and Accountants, ensuring high standards and regulatory oversight. Before you can operate, open bank accounts, hire employees, or scale, you must meet Saudi Arabia’s statutory accounting and tax requirements.

In 2026, this means aligning with ZATCA regulations, SOCPA-endorsed accounting standards, and the Saudi Companies Law. Meeting these legal requirements is essential for compliance and successful business operation. In this blog, we walk you through the 10 essential accounting requirements every business must meet to legally and confidently operate in Saudi Arabia.

The Accounting Landscape in Saudi Arabia

Saudi Arabia’s regulatory environment has evolved rapidly under Vision 2030. Financial reporting, tax compliance, and record-keeping are now enforced through digital government platforms, particularly by the Zakat, Tax and Customs Authority (ZATCA).

All companies operating in the Kingdom, local or foreign, are required to comply with:

• The Saudi Companies Law

• The Commercial Books Law

• IFRS standards as endorsed by SOCPA

• ZATCA regulations covering VAT, Zakat, Corporate Income Tax, withholding tax, and e-invoicing.

1. Maintain Proper Accounting Records Under the Companies Law

Every company must maintain accurate accounting records that reflect its true financial position.

This includes:

• Recording all financial transactions chronologically.

• Maintaining journals, ledgers, and supporting documentation.

• Preparing annual financial statements.

Certified public accountants and professional accounting services can help ensure that all required records, such as balance sheets, profit and loss statements, and cash flow statements, are properly maintained in compliance with Saudi regulations.

These records form the basis for audits, tax filings, and regulatory reviews.

2. Maintain Commercial Books in Arabic and Retain Them as Required

Saudi regulations require companies to maintain commercial and accounting books in Arabic, stored within the Kingdom and made available for inspection.

Mandatory records typically include:

• Journal and General Ledger.

• Inventory records.

• VAT, Zakat, and tax documentation.

• Financial statements and closing entries.

As part of the general organization of business compliance, companies must also register for social insurance with the General Organization for Social Insurance (GOSI) to ensure full regulatory adherence.

Commercial and tax records must be retained in line with ZATCA-prescribed retention periods, generally ranging between 5 and 10 years, depending on the record type.

3. Apply IFRS Standards as Endorsed by SOCPA

Saudi Arabia applies International Financial Reporting Standards (IFRS) as endorsed by the Saudi Organization for Chartered and Professional Accountants (SOCPA).

Depending on company size and eligibility:

• Full IFRS is mandatory for large enterprises and publicly accountable entities.

• IFRS for SMEs (the simplified IFRS for Small and Medium-sized Enterprises Standard endorsed by SOCPA) may be applied by small and medium-sized enterprises, including medium-sized enterprises, where eligible.

IFRS-compliant financial statements are required for banking, investor reporting, tax filings, and due diligence.

The adoption of IFRS for publicly accountable entities commenced on January 1, 2017, while other entities, including SMEs, were required to apply IFRS starting January 1, 2018. Since 2017, all businesses operating within Saudi Arabia are required to adhere to the International Financial Reporting Standards (IFRS).

4. Define the Financial Year and Prepare Annual Financial Statements

Every company must define a financial year. The first financial year may extend up to 18 months, subject to regulatory acceptance.

Companies are required to prepare:

• Statement of Financial Position (Balance Sheet).

• Statement of Profit or Loss.

• Statement of Cash Flows.

• Notes and disclosures.

In accordance with legal requirements and the e-invoicing initiative, companies in Saudi Arabia must submit their annual financial statements electronically by March 31 of the following reporting year.

5. Prepare Audited Financial Statements Where Required

ZATCA requires audited financial statements to be submitted for Zakat and tax filings where applicable. Audits must be conducted by a licensed public accountant recognised in Saudi Arabia. Only auditors licensed by the Ministry of Commerce and Industry and registered with SOCPA are authorized to perform audits, as required by the auditing profession.

Audited accounts are commonly required for:

• Zakat and corporate tax filings.

• Bank financing and account opening.

• Government and enterprise engagements.

6. Register for VAT and Apply the 15% Standard Rate

Value Added Tax (VAT) in Saudi Arabia is administered by ZATCA at a standard rate of 15%.

VAT registration is:

• Mandatory when taxable turnover exceeds SAR 375,000

• Voluntary from SAR 187,500

VAT-registered businesses must issue tax invoices, file VAT returns (monthly or quarterly), and maintain compliant VAT records.

7. Comply With ZATCA’s E-Invoicing (Fatoora) Requirements

All VAT-registered businesses must comply with mandatory e-invoicing (Fatoora).

This includes:

• Phase 1: Electronic generation and storage of invoices.

• Phase 2: Integration with ZATCA systems using approved formats.

Non-compliance may result in penalties and operational disruption.

E-invoicing has become essential for businesses operating in Saudi Arabia due to the Kingdom's rapid shift toward digital transformation.

8. Understand Zakat vs Corporate Income Tax Obligations

Saudi Arabia applies different tax regimes based on ownership structure:

• Zakat applies to Saudi and GCC ownership.

• Corporate Income Tax applies to foreign ownership.

Companies with mixed ownership apply both proportionally. Returns are filed annually through ZATCA’s platform, supported by compliant accounting records.

9. Manage Withholding Tax on Payments to Non-Residents

Payments to non-resident entities for certain services may be subject to withholding tax, including:

• Technical and management services.

• Royalties and licensing.

• Software and cloud-based services.

Withholding tax applies to payments made to foreign entities for these types of services, and businesses must ensure compliance with this requirement.

Withholding tax must be deducted at source and filed monthly with ZATCA.

10. Use Accounting Systems That Support ZATCA Compliance

ZATCA requires businesses to maintain systems capable of:

• Supporting VAT and withholding tax reporting.

• Retaining electronic records.

• Integrating with e-invoicing requirements.

• Producing audit-ready financial data.

ZATCA also requires businesses to implement accounting systems that support VAT, e-invoicing, and audit readiness. Professional accounting services can assist in meeting these requirements by ensuring regulatory compliance, facilitating statutory reporting, and supporting business transparency.

System-level compliance is essential from day one.

Why Getting This Right Matters in 2026

Saudi Arabia’s tax and compliance enforcement is now digital, proactive, and data-driven. Accounting gaps often surface during:

• Bank onboarding.

• Licence renewals.

• Tax audits.

• Due diligence and restructuring.

Legal accounting services and consulting a professional firm play an essential role in the success of investment projects in Saudi Arabia. These services enhance the competitiveness of clients in the Saudi market and contribute to building a stable and transparent economic environment.

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Get in touch with our experts todayto simplify compliance, reduce risk, and stay audit-ready as your business grows in Saudi Arabia.

FAQs: Accounting Requirements for Setting Up a Company in Saudi Arabia

1. Are accounting records mandatory for all company types in Saudi Arabia?
Yes. All entities operating in Saudi Arabia are required to maintain proper accounting records in line with the Companies Law and ZATCA regulations.

2. Do accounting books have to be maintained in Arabic?
Yes. Commercial and accounting books must be maintained in Arabic. Companies may keep English versions for internal or group reporting purposes.

3. Is IFRS mandatory for companies in Saudi Arabia?
Yes. Financial statements must be prepared in accordance with IFRS as endorsed by SOCPA, including IFRS for SMEs where applicable.

4. When is VAT registration required for new businesses?
VAT registration is mandatory once taxable turnover exceeds SAR 375,000. Voluntary registration is available from SAR 187,500.

5. What types of companies are recognized by the Saudi Ministry of Commerce, and what is required to set up a business?
The Saudi Ministry of Commerce recognizes several types of companies, including Limited Liability Company (LLC) and Joint Stock Company (JSC). To set up a business in Saudi Arabia, you must establish your company's legal status and register with the Saudi government.