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Introduction to Saudi Withholding Tax (WHT)
Saudi Withholding Tax is a direct tax imposed on non-resident entities earning income from Saudi Arabian sources. Governed by the Zakat, Tax and Customs Authority (ZATCA), WHT is crucial for foreign companies, freelancers, and consultants operating in the Kingdom.
Implemented to regulate cross-border payments and boost fiscal transparency, Saudi WHT plays a key role in the country’s evolving tax ecosystem, especially as the Kingdom positions itself as a global business hub under Vision 2030.
Who is Subject to Saudi Withholding Tax?
Saudi Withholding Tax applies when a Saudi-based entity (resident or a permanent establishment of a foreign company) pays for services or royalties to a non-resident party.
Common scenarios include:
- Payments to foreign consultants or freelancers
- Software license fees to overseas providers
- Interest or dividends sent to non-residents
- Rental income from assets located in Saudi Arabia
If you’re a business making such payments, you are legally obligated to deduct and remit the WHT to ZATCA.
Saudi Withholding Tax Rates 2025
|
Type of Payment
|
Withholding Tax Rate
|
|---|---|
|
Royalties
|
15%
|
|
Interest
|
5%
|
|
Dividends
|
5%
|
|
Management Fees
|
20%
|
|
Technical & Consulting Services
|
15%
|
|
International Telecommunication
|
5%
|
|
Airplane, Marine & Transport Services
|
5%
|
|
Insurance & Reinsurance Premiums
|
5%
|
💡 Note: These rates are subject to change depending on Double Taxation Avoidance Agreements (DTAAs) between Saudi Arabia and the non-resident’s home country.
Double Tax Treaties (DTTs) & Exemptions
Saudi Arabia has signed DTTs with over 50 countries, including the UAE, India, the UK, and Germany. These treaties:
- Allow reduced WHT rates
- Provide exemption in specific cases
- Help avoid tax duplication
To benefit from a DTT:
- The non-resident must provide a valid Tax Residency Certificate (TRC)
- An official request must be submitted via ZATCA’s online portal
Payment Deadlines & Filing
Saudi WHT must be paid within the first 10 days of the month following the payment to the non-resident.
Penalties for Non-Compliance:
- 1% of unpaid tax per 30 days delay
- Risk of ZATCA audits
- Non-deductibility of the expense in corporate income tax returns
GCC and Saudi Withholding Tax: What’s Different?
Saudi Arabia is currently one of the few GCC countries actively applying WHT, whereas others like the UAE and Bahrain still maintain zero income tax frameworks in most sectors.
However, the trend is changing, and GCC-wide tax reforms are expected as part of regional economic diversification plans.
How J K Management Consultancy Can Help
At J K Management Consultancy, we specialize in Saudi tax advisory, including:
- Withholding tax filing with ZATCA
- Support with Double Tax Treaty claims
- Business structuring to minimize tax exposure
- VAT, Zakat and corporate income tax compliance
Whether you’re a startup, SME, or multinational, our expert team ensures full compliance with Saudi Withholding Tax laws while maximizing your operational efficiency.
📨 Need help with Saudi Withholding Tax? Contact us today to schedule a free consultation.
Final Thoughts
Understanding and complying with Saudi Withholding Tax is critical for any entity doing cross-border business in the Kingdom. From determining applicability to calculating the right rate and filing on time, each step requires precision and updated knowledge of Saudi tax regulations.
Frequently Asked Questions (FAQs)
- Is withholding tax applicable to all foreign payments?
Not all. Only specific payments like royalties, consulting, and management fees are taxed under Saudi WHT.
- Can I get an exemption from WHT?
Yes, if your country has a tax treaty with Saudi Arabia and the payment qualifies under that agreement.
- How do I pay withholding tax in Saudi Arabia?
Through the ZATCA portal. Payments are due by the 10th of the following month.
- What happens if I miss the deadline?
Late payments attract penalties and could trigger a tax audit.
