Saudi Arabia · Guide
Saudi withholding tax is charged on the person who receives the money, and collected from the person who pays it. Most guidance is written for the Saudi payer and its monthly return.
This page takes the other seat. You are outside the Kingdom, a Saudi company or client is about to pay you, and you want to know what arrives.
The answer depends less on the rate table than on which line of it your payment falls under.
How Saudi withholding tax works
The tax applies to a payment that leaves a Saudi resident, or a permanent establishment in the Kingdom, for a non-resident. ZATCA states that payments between two residents carry no withholding.
- The payer withholds. The Saudi company, branch or government body deducts the tax and pays it to ZATCA. You receive the net amount.
- The base is the gross payment. Article 63 of the Implementing Regulations applies the rate to the full amount paid, whatever costs you incurred to earn it.
- The source must be Saudi. The payment has to arise from a source in the Kingdom, which reaches further than work physically done there.
- Your status is tested, not your passport. A non-resident with a permanent establishment in the Kingdom leaves this regime and is taxed on profit instead.
The payer's monthly return and its deadline belong to the Saudi company's own routine, covered in annual compliance for a Saudi company.
Saudi Arabia withholding tax rates by payment type
ZATCA published the full rate table in a tax circular dated January 2025. It has ten lines and three rates.
| Payment | Rate | What it covers |
|---|---|---|
| Management fees | 20% | Payments under a management contract, such as hotel or ship management |
| Royalties | 15% | Use or licence of industrial or intellectual property, know-how included |
| Any other services | 15% | Services from a Saudi source that fit no other line |
| Technical and consulting services | 5% | Technical, scientific, engineering, supervisory and advisory work |
| Dividends | 5% | Distributions by a resident company, and profits a branch remits |
| Loan returns | 5% | Interest and income from debt claims of every kind |
| Rent | 5% | Property in the Kingdom, and movable assets located there |
| Insurance and reinsurance | 5% | Premiums paid to a non-resident insurer |
Two published tables currently give different figures, one showing royalties at 18% and another showing technical services at 15%. Neither matches the circular.
Related party payments: 15% before, 5% since September 2023
This is the line that concerns a founder most, because a founder's own foreign company is by definition a related party of the Saudi one.
| Until September 2023 | Since September 2023 | |
|---|---|---|
| Technical or consulting fee paid to a third party | 5% | 5% |
| Technical or consulting fee paid to head office or a related company | 15% | 5% |
| Royalty paid to a related company | 15% | 15% |
| Management fee, any recipient | 20% | 20% |
The older rate is still printed in the Arabic regulations ZATCA publishes, consolidated to 2019: 15% on technical and consulting services paid to the head office or a related company.
The change is attributed to Minister of Finance Decision No. 25, reported in force from 15 September 2023. This page relies on law firm commentary for that date.
- The circular's layout invites a misreading. Its table has one column for third parties and one for related parties, which suggests two rates.
- Each rate cell spans both columns. The page shows a single figure per line, 5% for technical and consulting services whoever receives them.
- A guide quoting 15% for related parties is describing the position before September 2023.
- Royalties did not move. A licence fee paid to your own foreign company still costs 15%.
Withholding tax on dividends in Saudi Arabia: the 24% combined charge
A dividend paid to a non-resident shareholder bears 5%. That figure is accurate and incomplete, because the profit behind the dividend has already been taxed in the company.
The regulations say so directly. Article 63 provides that the distributing company being subject to income tax does not prevent withholding on what it distributes.
| Step | Amount |
|---|---|
| Taxable profit of the Saudi company | 100.00 |
| Income tax at 20% | 20.00 |
| Profit left to distribute | 80.00 |
| Withholding at 5% of the dividend | 4.00 |
| Received by the non-resident shareholder | 76.00 |
| Combined Saudi charge | 24.00 |
The formula is 20% plus 5% of the remaining 80%, which gives 24%. Four assumptions sit under it.
- The company is wholly owned by non-Saudi, non-GCC shareholders, so the whole profit bears income tax. Mixed ownership changes the first step, as explained in Saudi corporate tax and zakat.
- All of the after-tax profit is distributed. Retained profit bears only the first 20% until it is paid out.
- Taxable profit equals accounting profit. Non-deductible costs raise the real figure.
- No treaty lowers the 5%. Where a treaty gives 0%, the combined charge stays at 20%.
Two related points follow from the same article.
- A liquidation is treated as a distribution for whatever exceeds the paid-up capital, so winding up does not avoid the 5%.
- A branch pays it too. Profits a permanent establishment remits to related parties count as dividends, so a branch does not escape the 5%. The forms are compared in types of companies in Saudi Arabia.
Invoicing your own Saudi company: management fee or technical service
A founder abroad who charges the Saudi company for his time has three possible lines, and they sit 15 points apart. The regulations define two of them.
| Label on the contract | Rate | Definition in Article 63 |
|---|---|---|
| Management fee | 20% | Payment under a contract to manage, with hotel and ship management as the examples |
| Technical or consulting service | 5% | Technical and scientific services of any kind, studies, research, surveys, advisory, supervisory and engineering work |
| Any other service | 15% | Everything paid for a service that the list does not name |
The title of the invoice does not decide the line. The content of the contract does.
- Running the company is management. A fee for directing day to day operations reads as the 20% line, whatever the invoice calls it.
- A defined deliverable is easier to defend. A study, a design, a specification or an audit fits the 5% definition.
- Generic support can fall to 15%. Market guides place training, recruitment, bookkeeping and marketing in the residual line when part of the work is done in the Kingdom.
- Directors' fees are a grey point. The circular lists them beside management fees, and its rate table names only management fees. Confirm the rate before setting one.
The withholding rate is only half of the question. Whether the Saudi company can deduct a charge from a related party is a separate test, on the company's side.
Services performed outside Saudi Arabia
A common assumption is that work done from abroad is outside Saudi tax. For technical and consulting services, ZATCA says the opposite in a footnote to its rate table: the payment is subject to withholding "regardless of the place of performance".
The reason is the sourcing rule in Article 5 of the regulations.
- A technical or consulting service has a Saudi source when it is provided to a person resident in the Kingdom, or when it relates to an activity carried on there.
- A loan return has a Saudi source when the borrower is resident, or when the debt is secured on property in the Kingdom.
- An insurance premium has a Saudi source when the insured is resident or the insured asset is in the Kingdom.
- A supply of goods into the Kingdom does not, shipping and insurance included.
- Work attached to a supply contract does. Installation, maintenance, inland transport or training carried out in the Kingdom is treated as Saudi sourced, and only that part.
The practical reading: selling goods to a Saudi buyer carries no withholding, and selling advice does, even from a desk in another country.
Tax treaties: relief at source or by refund
ZATCA counts "more than (56)" double taxation agreements in its January 2025 circular. Other counts in circulation run from "over 50" to "60+", and none of them carries a date.
Accounts of how relief is obtained also differ. Some describe a refund claim as the normal route, others an automatic application at the time of payment. The circular provides both, and says which one applies.
- 1Is there a treaty in force with your country?If not, the domestic rate applies in full
- 2Can the payer file the documents before paying?Tax residency certificate, treaty request form and the payer's undertaking on Form Q/7C
- 3Yes: relief at sourceThe reduced rate or exemption applies directly to the payment, through the ZATCA portal
- 4No: withhold at the domestic rate, then claim a refundThe payer adds your letter of authorisation, the withholding return and proof of payment
- 5Five year limitAfter it, treaty benefits can no longer be claimed
| Relief at source | Refund | |
|---|---|---|
| Tax withheld on payment | Treaty rate | Domestic rate |
| Who files | The Saudi payer | The Saudi payer, with your authorisation |
| Your documents | Tax residency certificate | Certificate and letter of authorisation |
| Authentication | Saudi embassy or apostille | Saudi embassy or apostille |
| Payer's exposure | Undertakes to settle any tax and penalties | None beyond the claim |
- The apostille is accepted expressly, as an alternative to legalisation by the Saudi embassy.
- The residency certificate has no fixed format. ZATCA accepts it as issued by your tax authority.
- You must be the beneficial owner. A conduit company that passes the income on to a resident of a third country is taxed at domestic rates.
- A treaty sets a ceiling. Where the treaty figure is above the Saudi rate, the lower Saudi rate applies.
Treaty rates vary more than the headline suggests.
| Country | Dividends | Interest | Royalties | Read on |
|---|---|---|---|---|
| United Kingdom | 5% | 0% | 5% or 8% | Treaty text |
| Ireland | 5%, or 0% to a company holding 25% | 0% | 5% or 8% | Treaty text, interest from PwC |
| France | 0% | 0% | 0%, see below | PwC, treaty text for dividends and interest |
| United Arab Emirates | 5% | 0% | 10% | PwC |
| Singapore | 5% | 5% | 8% | PwC |
| India | 5% | 10% | 10% | PwC |
The French royalty line is less firm than the other two. The treaty makes dividends and interest taxable only in France. Its royalty article says taxable in France, without the word only, and PwC reports that the tax authority first claimed 15% on one royalty before agreeing to relief. The detail is in Saudi Arabia company from France.
Two readings of that table matter more than the figures.
- For services, a treaty can remove the tax, not only reduce it. ZATCA's own example treats a foreign consultancy as earning business profits, taxable only in its home country unless it has a permanent establishment in the Kingdom.
- A holding company above the Saudi entity changes little on its own. The dividend rate is already 5% in many treaties, and the holding has to be the beneficial owner to claim anything.
When a visiting founder or contractor becomes a permanent establishment
Withholding is the regime for a non-resident with no presence. Enough presence moves you into the other one: income tax on the profit attributable to a permanent establishment.
Sources disagree on where that line sits for services, and the texts explain why.
| Position | Where it comes from | What the text says |
|---|---|---|
| 183 days | UK treaty, Article 5 | Services within the country for more than 183 days in any 12 months |
| Six months | Ireland treaty, Article 5 | Services within a contracting state for more than 6 months in any 12 months |
| 182 days | Attributed to some treaties | Not read on a treaty text for this page |
- The threshold is set by each treaty. There is no single Saudi figure, so the count that applies is the one in your own country's treaty.
- Days are counted per project. Both texts read the same or a connected project together, across all staff sent.
- Physical presence is in the wording. Both treaties require the activity to continue within the country.
- Remote work is treated accordingly. ZATCA's 2025 circular gives online consultancy as an example that does not create a permanent establishment.
- One reported date is unconfirmed. A change of ZATCA position in May 2023, away from a service establishment without physical presence, is reported by a single source.
Without a treaty, the domestic definition applies. It covers a fixed place of business, a branch, a construction site, and a dependent agent who negotiates or concludes contracts on your behalf.
Individuals: no tax on salaries, withholding on the rest
Saudi Arabia has no personal income tax scheme. Earnings derived only from employment in the Kingdom are not taxed.
That does not make an individual invisible to the system.
- A non-resident individual paid for services is in the withholding regime like a company, at the rate for the type of service.
- A non-Saudi individual in business in the Kingdom is taxed on that business as an entity or permanent establishment would be.
- An independent professional under a treaty becomes taxable in the Kingdom with a fixed base there, or a stay of 183 days or more in twelve months.
- A sale of shares in a resident company by a non-resident falls outside withholding and is taxed under the general rules of the law.
Whether your home country taxes the same income again, and gives credit for the Saudi tax, is decided there.
Before the first invoice
Most of what a non-resident can control is settled before the contract is signed.
- Name the payment precisely, in the contract and on the invoice, in terms that match one line of the table.
- State who bears Saudi withholding. Without a gross-up clause, the amount withheld comes out of your fee.
- Order the residency certificate early, and have it apostilled or legalised before the first payment date.
- Ask the payer which route it will use. Relief at source requires its undertaking, and some payers prefer the refund.
- Count days per project if staff travel to the Kingdom, against the threshold in your treaty.
- Check the regime of the paying entity. Regional headquarters and special economic zones carry their own withholding exemptions, set out with the corporate tax regimes.
The bottom line
For a shareholder, the number to plan on is 24%, not 5%. For a service provider, the number is whichever of 5%, 15% or 20% the contract supports, and a treaty may remove it entirely if the documents are in place before payment.
None of this is visible in the incorporation file. It is decided by how the Saudi company is owned and by how money is meant to leave it, which is why the ownership structure and the first contracts are worth settling together.
If you are setting up the company these payments will come from, start with the Saudi Arabia company formation service. The rules on who can own it are in 100% foreign ownership for non-residents.
Frequently asked questions
What is the withholding tax rate in Saudi Arabia?
There are three rates. Management fees bear 20%, royalties and services that fit no other category bear 15%, and dividends, interest, rent, insurance premiums, technical and consulting services, air tickets, freight and international telecommunications bear 5%.
Is there withholding tax on dividends in Saudi Arabia?
Yes. A dividend paid by a resident company to a non-resident shareholder bears 5%, on top of the income tax the company has already paid on the profit. Some treaties reduce the 5% to zero.
What is the total tax on profit taken out of a Saudi company?
For a company wholly owned by non-Saudi, non-GCC shareholders that distributes everything, it is 24%. The company pays 20% on its profit, and the remaining 80% bears 5% withholding on distribution, which adds 4 points.
Does withholding tax apply to services performed outside Saudi Arabia?
For technical and consulting services, yes. ZATCA states that these payments are subject to withholding regardless of the place of performance, because the service is treated as Saudi sourced when it is provided to a resident of the Kingdom.
Is the rate on technical services paid to a related party 15% or 5%?
It is 5%. The 15% rate applied to technical and consulting fees paid to a head office or related company until September 2023. The ZATCA circular of January 2025 shows a single 5% rate for third parties and related parties.
How do I claim a reduced treaty rate in Saudi Arabia?
The Saudi payer applies through the ZATCA portal, either before payment for relief at source or afterwards for a refund. You supply a tax residency certificate from your tax authority, authenticated by the Saudi embassy or by apostille.
How many tax treaties does Saudi Arabia have?
ZATCA wrote "more than (56)" in January 2025. Higher figures circulate, up to "60+", without a date. Check that the treaty with your country is in force rather than relying on a total.
Do foreigners pay income tax on a salary in Saudi Arabia?
No. Saudi Arabia has no personal income tax scheme, and earnings derived only from employment in the Kingdom are not taxed. Business and professional income of a non-Saudi follows different rules.
When does a foreign service provider become a permanent establishment in Saudi Arabia?
Under a treaty, when staff provide services inside the Kingdom beyond the treaty's threshold, which is 183 days in twelve months in the UK treaty and six months in the Irish one. A fixed place of business or a dependent agent can create one sooner.
Sources
- ZATCA tax circular on withholding tax under double taxation agreements, version 1, January 2025: the rate for each payment type, the rule on services performed abroad, and the two treaty procedures
- ZATCA, Implementing Regulations of the Income Tax Law, Arabic text consolidated to 2019: Article 63 on what counts as a management fee, a technical service and a dividend, and the 15% related party rate that applied before 2023
- HMRC, 2007 UK and Saudi Arabia double taxation convention in force: the 183 day services threshold in Article 5 and the treaty caps on dividends, debt claims and royalties
- Irish Revenue, Ireland and Saudi Arabia double taxation convention: a services threshold written as six months rather than 183 days
- PwC Worldwide Tax Summaries, Saudi Arabia withholding taxes, reviewed 29 July 2026: treaty rates by country and the ten day payment deadline
Official: the withholding rates, the rule on services performed outside the Kingdom, the count of more than 56 treaties and both treaty procedures come from the ZATCA circular of January 2025, whose English text is for guidance only, the Arabic prevailing. Definitions of management fees, technical services and dividends come from Article 63 of the Implementing Regulations in the Arabic version ZATCA publishes, consolidated to 2019 and therefore older than the 2023 rate change. The UK and Ireland treaty clauses were read on the texts published by HMRC and Irish Revenue. Secondary: the 20% income tax used in the dividend calculation, the treaty rates for other countries and the position on salaries come from PwC Worldwide Tax Summaries. The wording of the French treaty on dividends, interest and royalties was read on the treaty text for the France page of this series. The date of 15 September 2023 for the related party rate cut comes from law firm commentary on Minister of Finance Decision No. 25, which was not read directly. To reconfirm before acting: the reported May 2023 change of position on service permanent establishments, the 182 day threshold attributed to some treaties, the rate on directors' fees, and any treaty rate for your own country on the treaty text. This is not legal or tax advice.