What You Need to Know About Cryptocurrency Tax in Saudi Arabia

Trading cryptocurrencies has become part of the portfolio for many investors in the Kingdom. With increasing transaction volumes, a common question arises: Is there tax on my profits from Bitcoin or Ethereum? The answer does not come in a clear text, but the Zakat, Tax and Customs Authority (the Authority) has set rules that can be applied in practice.

Concept of Tax on Cryptocurrencies

In Saudi Arabia, there is no personal income tax on Saudi individuals, but zakat is imposed at 2.5 % on net wealth that is invested and generates profit. Meanwhile, non-Saudi residents who are subject to income tax will be governed by the income tax system under the general tax law.

For organisations or individuals who register a commercial activity in the field of cryptocurrencies (for example: selling services for Bitcoin), value added tax (VAT) applies to the value of the service provided according to VAT-liable activities.

Taxable Events

Not every movement in your wallet triggers a tax calculation. We define what counts as a taxable event based on the type of action:

• Selling or converting a cryptocurrency against fiat currency or another cryptocurrency.
• Receiving cryptocurrency as payment for a service rendered.
• Returns from staking or yield farming operations that are paid in cryptocurrency.
• Dividend distributions from encrypted investment funds (REIT).

What is not calculated for tax purposes is:

• Transferring assets between two wallets you own without a change in value.
• Internal transactions between your accounts if not used for work or trade.

How to Calculate Net Profit or Loss

The basic rule is revenue – cost = net profit (or loss). To apply it accurately:

1. Record the date of each sale or transfer, with the value of the received currency in Saudi riyal (SAR) according to the exchange rate at the time of execution.
2. Determine the cost of acquiring the asset: original purchase price plus any trading fees (commissions).
3. Calculate the difference between the amount received and the cost amount. If the difference is positive, it is classified as income subject to zakat or income tax; if negative, you can deduct the loss from other profits according to prevailing regulations.

Practical example:

• In January 2023, you bought 0.5 Bitcoin for 90 000 SAR (including 300 SAR commission).
• In March 2024, you sold 0.5 Bitcoin for 150 000 SAR (including 250 SAR commission).
• Total cost = 90 000 SAR + 300 SAR = 90 300 SAR.
• Net proceeds = 150 000 SAR – 250 SAR = 149 750 SAR.
• Net profit = 149 750 SAR – 90 300 SAR = 59 450 SAR.

If you are Saudi, zakat of 2.5 % is due on 59 450 SAR, approximately 1 486 SAR. If you are a non-Saudi resident, add this amount to your income tax return to apply the applicable tax rate (for example, 15 %).

Tax Filing Procedures

The next step is to inform the Zakat, Tax and Customs Authority of any profits or losses you have made:

• Use the “Zakat and Safety” platform to submit your zakat return if you are Saudi. Select “Income from cryptocurrencies” within the received categories.
• For non-Saudi residents, log into the “Income Tax” system (e‑Tax) and record the profits as income from “non-traditional commercial activities”.
• Ensure you attach a copy of your trading account statement or a CSV file showing each transaction, with documentation of the exchange rates used.

Filing the return by the deadline (31 March for zakat, 30 April for tax) protects you from penalties and interest surcharges.

Other Practical Examples

Receiving staking rewards – If you receive 0.02 Ethereum monthly for locking up your coins, this event is treated as income. Its value in riyal at the time of receipt is added to net profit and zakat or tax is calculated thereon.

Paying for services via cryptocurrency – If you provide technical consultancy and receive 5 000 SAR worth of cryptocurrency, the amount is calculated using the exchange rate at the moment of transfer as zakat-liable income.

Loss in rapid trading – If you sell a cryptocurrency at a loss of 3 000 SAR, you can deduct this loss from your net profits in the same financial year, thereby reducing the amount of zakat or tax due.

Tips to Avoid Common Mistakes

1. Record every transaction – Do not rely on memory; keep CSV files from exchanges.

2. Use the official exchange rate – Refer to a reliable source such as the Saudi Central Bank website to determine the riyal value of transfers.

3. Update your records regularly – Review your portfolio every three months to identify differences early.

4. Consult a tax adviser – If your trading volume exceeds a threshold or you engage in commercial activity, it is advisable to seek expert advice to avoid confusion between zakat and tax.

As laws evolve, the Zakat, Tax and Customs Authority may issue new guidance on digital assets. Following official announcements and updating your calculation method accordingly will ensure compliance and allow you to continue benefiting from the digital market without tax concerns.