Withholding tax (WHT) is tax that the payer deducts from a payment and pays to the tax authority on the recipient's behalf. In Saudi Arabia it applies when a resident, or a permanent establishment of a non-resident, pays a non-resident from a source in the Kingdom, at rates from 5% to 20% depending on the type of payment.
What is withholding tax in Saudi Arabia?
A non-resident that earns income from Saudi Arabia without a permanent establishment there does not settle Saudi tax on it through its own return. Instead, the Saudi payer withholds tax from the gross amount and pays it to ZATCA.
The duty falls on every resident payer, whether or not it pays income tax. A company that pays zakat rather than income tax must still withhold on payments to non-residents, and so must government bodies (Income Tax Law, Article 68, as explained in the guideline). Payments to residents and to permanent establishments in the Kingdom are not subject to withholding.
What are the withholding tax rates in Saudi Arabia?
| Type of payment | Rate |
|---|---|
| Management fees | 20% |
| Royalties | 15% |
| Land transport within the Kingdom | 15% |
| Any other payments | 15% |
| Dividends | 5% |
| Rent | 5% |
| Loan charges (income from debt claims) | 5% |
| Insurance and reinsurance | 5% |
| Technical and consulting services | 5% |
| Air tickets, and air or sea freight | 5% |
| International telecommunications services | 5% |
A double taxation agreement can reduce or remove the rate, either at source through a request on ZATCA's portal with the recipient's tax residency certificate, or by withholding at the domestic rate and claiming a refund (ZATCA circular, January 2025).
What does a withholding tax calculation look like?
Why does withholding tax matter for finance teams in Saudi Arabia?
- Monthly: submit the withholding statement and pay the tax withheld within the first 10 days of the month after the payment.
- Annually: submit an annual withholding statement within 120 days of the fiscal year end (60 days for partnerships), even if it shows zero, where there were withholding cases in the year.
- Certificates: give each recipient a certificate of the amount paid and the tax withheld.
- Records: keep the recipient's name and address, the type and value of each payment and the tax withheld for at least 10 years after payment.
- Penalties: a delay fine of 1% of the unpaid tax for every 30 days of delay, and a penalty of 25% of the tax difference for untrue information or fraud aimed at evading tax.
Errors to watch for: classifying a fee at 5% when it is a management fee at 20% or a royalty at 15%, missing payments made by card or through an agent, and grossing up a contract without booking the extra cost. Check the classification when the bill is booked in accounts payable, not when the statement is due.
This page is general information, not tax advice. Rates and treaty positions change: confirm with ZATCA or your adviser before you file.
Questions people ask
Does withholding tax apply to payments to Saudi suppliers?
No. Payments to residents and to permanent establishments of non-residents in the Kingdom are not subject to withholding, because that income is already in their own tax base. It applies to payments to non-residents from a source in the Kingdom.
Who is responsible for withholding tax: the payer or the recipient?
The payer must withhold the tax and pay it to ZATCA, and the delay fine for late payment falls on the payer. If the contract says the payer bears the tax, the extra cost of grossing up is also the payer's.
When is withholding tax due?
Within the first 10 days of the month after the month in which the payment was made, with the monthly withholding statement. A payment on 20 January is due by 10 February.
Can a tax treaty reduce withholding tax?
Yes, where Saudi Arabia has a double taxation agreement with the recipient's country. The payer can request the treaty rate at source on ZATCA's portal with the recipient's tax residency certificate, or withhold at the domestic rate and apply for a refund.
Official and primary sources, read on the date shown. Rules change: confirm with the authority or your adviser before you act.
- ZATCA: General Guideline for Withholding Tax under the Income Tax Law and its Implementing Regulations, second version, May 2026 (scope, rates, monthly and annual statements, records, penalties) (read 9 October 2026)
- ZATCA: Tax Circular, Implementation of Withholding Tax under Double Taxation Agreements, version 1, January 2025 (read 10 October 2026)