Withholding Tax in Saudi Arabia Rates and Rules for 2025

Companies making cross-border payments need a clear view of withholding tax in Saudi Arabia. In KSA, WHT applies when a Saudi resident (or a Saudi PE of a foreign company) pays a non-resident for services performed. 

The rates vary between 5%, 15%, and 20% on the basis of service type. This guide explains what is withholding tax in Saudi Arabia, the standard rates, filing timelines, treaty relief, documentation, common mistakes, and practical controls for finance teams.

What is Withholding Tax in Saudi Arabia​?

Saudi WHT generally applies to payments made by a Saudi resident (or PE) to a non-resident for services performed. The core idea is source-based taxation: the amount is taxed in Saudi because the service or right is connected to the Kingdom. 

Typical payment categories caught by the rules include dividends, interest, royalties and license fees, management fees, technical and consulting services, insurance and reinsurance premiums, air tickets and freight, international telecom, and rent. 

The payer withholds at the applicable rate and remits to ZATCA.

Withholding Tax Rates In Saudi Arabia

This table gives a quick view of standard Saudi withholding tax rates on common outbound payments and how tax treaties can reduce them. Use it as a ready checklist when planning dividends or royalty payments to non-resident parties.

Payment type	Domestic WHT rate (non-treaty)	Typical treaty WHT range*	Example low treaty rate*	Expert Advice
Dividends to non-resident	5%	0% – 15%	0% (e.g. France, Cyprus)	Lower rates usually apply when the foreign shareholder holds a minimum stake (often 10% to 25%) or is a government / sovereign fund.
Interest to non-resident	5%	0% – 10%	0% (several treaties)	Many treaties reduce interest WHT to 0% for government lenders, central banks, or recognised financial institutions; others cap it at 5% or 10%.
Royalties to non-resident	15%	0% – 15%	0% (some technical cases)	Treaty caps can differ for “equipment royalties” versus other IP; reduced rates often sit at 5% – 10% where conditions are met.
Service fees to non-resident (technical / others)	5%, 15% or 20% (depending on service category)	Often covered as “royalties” or “business profits”	Depends on treaty wording	Domestic law applies 5% / 15% / 20%; treaties may re-characterise some services, so you need to check if they qualify as business profits (no WHT if no PE).
Payments to non-treaty countries	As per domestic rules above	Not applicable	Not applicable	Where there is no tax treaty, only the Saudi domestic WHT rules and any local relief (if any) apply.

Payment and Certificates Required

When to file?

Withheld tax must be paid and reported by the 10th day of the month following payment. Missing the window risks penalties and interest.

Late payment penalty: If you miss the due date, the authority charges an extra 1% of the unpaid tax for every 30 days that the balance stays outstanding.

Misreporting penalty: If your tax return is judged to be false or meant to hide tax, the authority can add a penalty of 25% of the unpaid tax.

How to file?

Payers submit a monthly WHT return through ZATCA’s e-portal, settle the tax, and keep the electronic receipt.

What to give vendors?

In practice, payers issue a WHT certificate/statement to the non-resident showing the gross amount, rate, tax deducted, and payment date. This document helps the payee claim a foreign tax credit in its home country, where allowed.

What is Treaty Relief?

Saudi Arabia has an extensive treaty network. Treaties can reduce WHT on dividends, interest, and royalties if the payee is the beneficial owner and all conditions are met. 

Saudi practice also allows automatic application of the relevant tax treaty (rather than paying the domestic rate and seeking a refund later), subject to documentary conditions.

Keep current tax-residency evidence for the payee and any required forms on file before applying a reduced rate.

Working steps for treaty relief:

• Identify the treaty for the payee’s country.
• Check article-specific rates and any ownership/holding period tests.
• Collect a valid tax-residency certificate (TRC) and any ZATCA-requested declarations.
• Apply the reduced rate in payroll/AP only when documents are complete and current.

How To Ensure Correct Classification?

Correctly labelling the payment is half the job. The economic substance, not only the invoice caption, decides the category.

• Management fee vs technical service. Broad management or head-office oversight usually falls under management fees (20%); specific deliverables by engineers or consultants are often technical/consulting (5%).
• Royalty vs service. Access to IP, software usage rights, or know-how is commonly royalty (15%), even if the invoice says “service.”
• Rent, air tickets, telecom, freight, and insurance. These routinely attract 5%, but confirm scope and the counterparty’s role (e.g., reinsurance).

Evidence Pack: What Auditors And ZATCA Expect

A tidy file shortens queries and supports treaty claims:

• Signed contract/SOW with a clear description of services or IP rights.
• Proof of service performance or access (deliverables, timesheets, system logs).
• Invoice, payment proof, and WHT calculation sheet.
• WHT certificate issued to the non-resident.
• For treaty relief: TRC valid for the period, beneficial-owner declaration (if needed), and any treaty-specific form. PwC Tax Summaries

Common Mistakes in Taxation and Quick Fixes

Mislabelled services. Calling a royalty a “service” does not change the 15% rate. Fix by aligning contract language to economic substance.

Treaty used without documents. Applying a reduced rate without a valid TRC risks assessment. Collect and date-check the certificate before payment.

Late filing. Missing the 10th-day deadline leads to penalties. Add a monthly close checklist that locks WHT filings first.

Wrong base. WHT is on the gross amount; net-of-tax contracts require a gross-up to keep the vendor whole. Keep a standard gross-up calculator in AP.

PE confusion. If the foreign vendor has a Saudi PE, WHT may not apply; instead, the PE reports income in Saudi. When in doubt, obtain a PE status confirmation from the vendor.

By following the withholding tax regulations in Saudi Arabia​ correctly, accounting teams can easily overcome such mistakes.

Conclusion

For 2025, handling withholding tax in Saudi Arabia is about three habits: classify payments correctly, gather treaty documents before payment, and file by the 10th every month. 

By keeping contracts and evidence aligned to the category, using treaty relief only with complete files, and maintaining a disciplined close calendar, WHT becomes a predictable checklist rather than a surprise assessment.

If withholding tax rules feel heavy, Arnifi’s accounting and bookkeeping services in Saudi can run the numbers, apply the right rates, and prepare clean records for each cross border payment. You get compliant entries, clear support files, and fewer surprises when the authority asks questions.

FAQs

What is withholding tax in Saudi Arabia?

A tax collected at source by the Saudi payer on certain cross-border payments to non-residents. It targets services performed and specified income categories connected to KSA.

What are the headline domestic rates?

5% for dividends and interest, 15% for royalties, 20% for management fees, and generally 5% for technical/consulting and several other service categories.

When is the return due?

By the 10th day of the following month via ZATCA’s portal. Be sure to add it to the calendar else delays can lead to penalties.

Can treaties reduce WHT?

Yes. Many Saudi treaties cap WHT on dividends, interest, and royalties. Saudi practice allows automatic application with proper documentation.