Yusef Alyusef is a managing director and partner at Alvarez & Marsal in Riyadh, where he leads work in tax policy, international and domestic tax, and dispute resolution. A veteran of the industry with over two decades of experience in law, policy, and tax — including more than a decade of tax experience, primarily from his extensive service at the Zakat, Tax, and Customs Authority (Zatca) — Alyusef brings a unique, dual perspective to the Kingdom’s rapidly evolving tax landscape.

EnterpriseAM KSA discussed with Alyusef the drivers behind Saudi Arabia’s tax reforms, the impact of Vision 2030 on the regulatory environment, and how businesses can navigate the complexities of compliance and zakat in a diversifying economy.

EnterpriseAM: What do the most recent Saudi tax reforms — such as the changes to VAT implementation — mean for businesses currently in the Kingdom or those looking to invest?

Yusef Alyusef: To look at the tax landscape in the region, specifically in the GCC and Saudi Arabia, you have to see the major changes of the last 10 years. These were driven by two main principles — economic diversification, which led to the modernization of the tax regimes, and alignment with global international policies.

In Saudi Arabia, the decision to reduce reliance on oil revenues under Vision 2030 has driven significant changes. We saw the introduction of VAT in 2018, followed by transfer pricing rules in 2019, the VAT rate increasing to 15% in 2020, and the establishment of e-invoicing in 2021. Most recently, in April 2025, Zatca amended the VAT implementing regulations, tightening rules related to group eligibility and other treatments. These changes have created a steep learning curve for businesses, though the authority has balanced this by introducing amnesty programs to help companies fix past errors without hefty penalties.

EnterpriseAM: How do these reforms impact foreign investment flows and companies setting up regional headquarters?

YA: Understanding the legislative framework is crucial for FDI. Investors coming into the region often partner with local businesses or government-owned entities for gigaprojects. For these firms, understanding the tax exposure — and conducting proper tax and financial due diligence — is essential for successful mergers and acquisitions.

To attract FDI, Saudi Arabia has introduced programs like the Regional Headquarters (RHQ) initiative, which offers tax and customs incentives. Special zones have also been established to provide incentives for specific industries. Simultaneously, global policies like the OECD’s Base Erosion and Profit Shifting (BEPS) initiative — specifically Pillar Two’s 15% global minimum tax — mean multinational enterprises must adapt their tax functions to remain compliant both locally and globally.

EnterpriseAM: What are the major compliance risks businesses face right now?

YA: The biggest risk is simply being unaware of or unprepared for legislative changes. If business owners, CEOs, and CFOs aren’t up to speed, they could face audits and scrutiny. For example, the April amendments to VAT regulations introduced “marketplace provisions” for online platforms, clarifying how they must collect tax. This requires businesses to adjust their internal compliance and ERP logic to mirror these changes.

On the positive side, the feedback loop from dispute resolutions has helped clarify regulations, creating a clearer tax environment. The tax authority has also resolved past ambiguities regarding permanent establishment and tax residency, providing greater certainty for cross-border businesses.

EnterpriseAM: Are there any specific sectors that have been particularly impacted?

YA: I believe all sectors are equally impacted, especially those providing services that require collecting indirect taxes. While specific sectors like real estate have seen targeted changes — such as white land fees — the broader changes to VAT and transfer pricing touch everyone.

Notably, transfer pricing rules, which were introduced in 2019, have become mandatory for some zakat payers as of 2024. Previously, these rules primarily applied to taxpayers (filing returns on or after 1 January 2018), but now zakat payers must also observe them, regardless of their sector.

EnterpriseAM: What is one thing people often misunderstand about the Saudi tax regime?

YA: For foreign investors or practitioners unfamiliar with Saudi Arabia, the application of zakat is a common point of confusion. Saudi Arabia is one of the few countries that applies zakat. The misconception arises because the rate is 2.5%, but it is calculated on net worth, not on profit or loss.

Some look at it and assume it translates to a very low effective tax rate, which isn’t always accurate. The effective rate can be in line with major economies, or sometimes higher or lower, depending on the base. Bridging this understanding gap is critical to avoiding misalignment.

EnterpriseAM: How does Alvarez & Marsal help clients navigate this environment?

YA: We help clients by diagnosing their situation, delivering solutions, and providing ongoing support to ensure they stay on track. We don’t just resolve issues; we look backward to understand the root causes and forward to ensure compliance is integrated by design. We achieve this by combining global expertise from our network with local execution delivered by predominantly Saudi subject matter experts.

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