Saudi Arabia imposes withholding tax (WHT) on certain payments to non-residents. The payer (the Saudi entity) must withhold and remit to ZATCA. This guide covers rates by payment type, the 10-day remittance rule, WHT on intra-group management and technical fees, double tax treaty reduced rates, how to claim relief, and penalties. See CIT, VAT, transfer pricing, profit repatriation, and Zakat.
Overview
WHT applies to payments of dividends, interest, royalties, management fees, technical services, rent, and other income paid to non-residents. The Saudi payer must withhold the applicable percentage and remit it to ZATCA. The non-resident may be eligible for a reduced rate under a double tax treaty if they provide a valid tax residency certificate and meet treaty conditions.
WHT Rates by Payment Type
| Payment type | Default rate |
|---|---|
| Dividends | 5% |
| Royalties | 15% |
| Management fees | 20% |
| Technical services | 5% |
| Interest | 5% |
| Rent (to non-resident) | 15% |
Who Withholds and Who Remits
The Saudi resident payer (company or branch) is responsible for withholding the correct amount from the payment to the non-resident and remitting it to ZATCA. The payer must file a WHT return and pay the withheld amount. Failure to withhold does not shift the obligation to the non-resident; the payer remains liable and can face penalties.
10-Day Remittance Deadline
Withheld amounts must be remitted to ZATCA within 10 days of the end of the month in which the payment was made (or as per the current ZATCA rule). File the WHT return via the ZATCA portal and pay the tax. Late remittance attracts penalties (e.g. 25% surcharge — see Penalties).
WHT on Intra-Group Management and Technical Fees
Payments by a Saudi subsidiary to its foreign parent (or group companies) for management fees are subject to 20% WHT; for technical services, 5% WHT. This is one of the most common compliance gaps: companies deduct the expense for CIT but forget to withhold and remit WHT. Ensure every payment to a non-resident is assessed for WHT and that the amount is withheld and remitted. Treaty relief may lower the rate if the recipient is a resident of a treaty country and provides a valid TRC (see tax residency certificate).
Double Tax Treaty Reduced Rates
Saudi Arabia has double tax treaties with many countries. Treaty rates for dividends, interest, royalties, and services can be lower than the domestic rates (e.g. 0%, 5%, or 10%). To apply the treaty rate, the payee must be a resident of the treaty country and provide a valid tax residency certificate (TRC) for the relevant year. ZATCA may require the certificate to be submitted with the WHT return or in advance. Keep a table of treaty rates for your main counterparty countries.
How to Claim Treaty Relief
Obtain a Tax Residency Certificate (TRC) from the payee’s country of residence (for the relevant year and treaty). Submit it to ZATCA as required (e.g. with the WHT return or via a refund/relief application). Withhold at the treaty rate (not the domestic rate) when the TRC and conditions are satisfied. If you withheld at the domestic rate and the payee is entitled to treaty relief, a refund may be possible — follow ZATCA’s process. See how to obtain a Saudi TRC for outbound claims; for inbound payments to non-residents, the non-resident obtains the TRC from their country.
Penalties for Failure to Withhold
Failure to withhold or remit WHT can result in a 25% surcharge on the amount that should have been withheld, plus the underlying tax. ZATCA can assess the payer. Ensure all payments to non-residents are reviewed for WHT and that returns and remittances are filed and paid on time. See ZATCA penalties for the full schedule.
WHT Compliance Checklist
- Identify all payments to non-residents (dividends, interest, royalties, management fees, technical services, rent, commissions).
- Apply the correct domestic or treaty rate; obtain and keep a valid TRC from the payee when using treaty rates.
- Withhold from the gross payment before remitting to the non-resident; remit the withheld amount to ZATCA within the 10-day deadline.
- File the WHT return via the ZATCA portal for the month in which the payment was made.
- Document payment date, gross amount, WHT rate, withheld amount, and payee details for audit.