General Manager
Salary & Tax.
Should you pay yourself a salary or take dividends in Saudi Arabia? We explain the General Manager salary rules, WPS compliance, and tax benefits for foreign investors.
Key Policy
When you set up an LLC in Saudi Arabia as a foreign investor, you typically wear two hats: you are the Owner (Shareholder) and the General Manager (GM). How you pay yourself depends on your tax strategy and residency status.
1. The Salary Route (WPS Compliance)
If you are a resident in KSA on your company’s sponsorship, you are legally an employee of your own firm. This means:
2. The Dividend Route
Dividends are paid from “After-Tax” profits. This means the company first pays 20% Corporate Tax on its net profit, and then distributes the remaining amount to shareholders.
Withholding Tax (WHT)
If you are a non-resident shareholder (living outside KSA), dividends sent abroad are subject to a 5% Withholding Tax.
3. Salary vs. Dividends: Tax Efficiency
| Payment Method | Corporate Tax Impact | Personal Tax |
|---|---|---|
| Monthly Salary | Reduces Taxable Profit | 0% (No Personal Income Tax) |
| Dividends | No Impact (Paid from Net) | 5% (If sent abroad) |
4. Common Pitfalls
Direct Transfers
Never transfer “Salary” directly from the business account to your personal account without a WPS file. This will trigger a yellow or red status on your Nitaqat/Qiwa dashboard.
Excessive Salaries
ZATCA (Tax Authority) may challenge “excessive” GM salaries if they are clearly designed only to wipe out company profits. Keep salaries within “Market Benchmarks.”
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