Here are some key withholding tax considerations to keep in mind when doing business in Saudi Arabia:
- The withholding tax rates vary depending on the type of income and whether the recipient is a related party or not. For example, the withholding tax rate on dividends is 5% for both related and non-related parties, while the rate on royalties is 15% for related parties and 20% for non-related parties.
- Withholding tax is applied on payments made to non-resident parties, regardless of whether they have a permanent establishment in Saudi Arabia. This means that even if a non-resident party does not have any physical presence in Saudi Arabia, they may still be subject to withholding tax on payments made to them by a Saudi resident.
- The withholding tax must be withheld and remitted to the Saudi tax authorities by the payer of the income. The payer is responsible for ensuring that the correct amount of withholding tax is withheld and remitted.
- There are a number of exemptions and reductions from withholding tax that may apply. For example, there is an exemption from withholding tax on payments made to a non-resident party for technical services performed outside of Saudi Arabia.
It is important to consult with a tax advisor to understand the specific withholding tax requirements that apply to your business.
Here are some additional withholding tax considerations that may be relevant to businesses doing business in Saudi Arabia:
- The withholding tax rates may change from time to time. It is important to stay up-to-date on the latest withholding tax rates.
- The withholding tax rules may be complex and there are a number of exceptions and special rules. It is important to seek professional advice to ensure that your business is complying with the withholding tax rules.
- Withholding tax can be a significant cost for businesses. It is important to factor in the cost of withholding tax when pricing your products or services.
By understanding the key withholding tax considerations, businesses can avoid penalties and ensure that they are complying with the law.
Arnifi is digital first Corporate service provider helping companies enter the Middle East region, starting with UAE and Saudi Arabia markets. Founded and backed by professionals from Amazon, Souq and other large companies operating in KSA – the team understands what it takes to succeed as a startup in both UAE and Saudi Arabian markets, apart from going through the setup process multiple times.
Arnifi will provide a truly digital experience to entry and scale up of companies both UAE and Saudi Arabia. The Arnifi promise is simple, yet revolutionary, use technology and a great team to provide transparency, efficiency and great customer experience in the whole process.
Check out at – www.Arnifi.com for more details.
