Saudi Withholding Tax and Tax Treaties: Rates, Permanent Establishments and Relief
The short answer
Saudi withholding tax is a final tax on gross payments to non-residents from a Saudi source. A tax treaty can reduce it — but only through ZATCA’s at-source or refund procedure, only for a beneficial owner, and never above the domestic rate. If the foreign provider has a permanent establishment in the Kingdom, its profits there are taxed by assessment instead.
Key facts
Most Saudi treaties have no separate article for technical fees: ZATCA treats service fees as business profits, taxable in the Kingdom only through a permanent establishment.
Source:WHT-DTA Circular s.3.2.5 example and s.3.2.11 [T11-0408]A service PE needs staff physically in the Kingdom beyond the treaty threshold (usually 183 days, 182 days or 6 months in 12 months). Remote services never create one.
Source:PE Circular 2303001 (17 May 2023) s.3.1.1.2-3.1.1.3, Examples 1-4 [T11-0409]Saudi domestic law sets no minimum duration for a construction-site PE.
Source:Income Tax Law RD M/1 of 15/1/1425H, Art. 4(a)-(b) (BOE Arabic, read 5 Oct 2026) [T11-1300] official text ↗The Kingdom applies the MLI principal purpose test to its covered treaties.
Source:MLI Art 7(1) [T11-0406]Germany and the USA have no comprehensive income tax treaty with the Kingdom.
Source:BMF DBA status list 1 Jan 2026 [T11-0418]
Permanent establishment basics
Under the Income Tax Law, a PE is a permanent place through which a non-resident carries on its activity, including through an agent; construction sites, assembly facilities and their supervision, natural-resource survey sites and a licensed branch are PEs, with no minimum duration.
Source:Income Tax Law RD M/1 of 15/1/1425H, Art. 4(a)-(b) (BOE Arabic, read 5 Oct 2026) [T11-1300] official text ↗Under treaties, the PE types are a fixed place of business, an agency PE, a project PE and a service PE.
Source:ZATCA Circular 'Taxation of Permanent Establishments in the context of DTAs', Publication No. 2303001, 17 May 2023, ss.2.3-2.3.4 [T02-0850] official text ↗A dependent agent who habitually concludes contracts for the foreign enterprise creates a PE; some treaties also count an agent who keeps and delivers stock.
Source:Treaty Art 5(5)-(6) [T11-0414]PE Circular s.2.3.2 [T02-0852]Time spent by closely related enterprises on connected activities at the same project is added together under the MLI anti-splitting rules, where the treaty partner adopted them.
Source:MLI Arts 14-15 [T11-0410]Where a PE exists, only profits attributable to it are taxed, on a net basis; payments that are income of the PE are outside WHT.
Source:PE Circular s.3.1.1.4, 3.1.2 [T11-0411]PE Circular ss.3.1.1.4 and 3.1.2 [T02-0856]
Treaty mechanics
Relief is not automatic: at source after a ZATCA portal request, or by refund after withholding at the domestic rate.
Source:ZATCA Tax Circular 'Implementation of WHT under DTAs' v1 Jan 2025, s.4.1-4.2 [T11-0400]Dividends, interest and royalty rates apply only to the beneficial owner; conduits are taxed at domestic rates.
Source:Circular s.3.2.8-3.2.11 [T11-0405]Profits from ships or aircraft in international traffic are taxable only in the State of residence; the UAE, Egypt, Turkey and Kuwait treaties extend this to road vehicles.
Source:Circular s.3.2.7 [T11-0413]A person taxed contrary to a treaty may bring a mutual agreement procedure case, generally within 3 years of first notification; some older treaties have shorter windows.
Source:MLI Art 16 [T11-0416]Which language governs a treaty depends on its final clause: Arabic-only for the UAE, Egypt, Kuwait and Jordan; English prevails in the tri-lingual treaties with China, India, Turkey and others.
Source:Each treaty's final clause [T11-0417]
Treaty withholding rates by country
Headline rates under each treaty, read from the treaty rows. Where a treaty cap is higher than the Saudi domestic rate, the domestic rate applies (marked). Holding-size, beneficial-owner and procedure conditions apply — the rate is only available through ZATCA’s at-source or refund route.
| Country | In force | Dividends | Interest | Royalties | Row |
|---|---|---|---|---|---|
| Algeria | 2016-03-01 | 0% | 0% | 7% | T11-0121 ↗ |
| Austria | 2007-06-01 | 5% | 5% | 10% | T11-0122 ↗ |
| Azerbaijan | 2015-05-01 | 5% / 7% (conditions apply) | 5% (domestic; cap 7%) | 10% | T11-0123 ↗ |
| Bangladesh | 2011-10-01 | 5% (domestic; cap 10%) | 5% (domestic; cap 7.5%) | 10% | T11-0124 ↗ |
| Belarus | 2010-08-01 | 5% | 5% | 10% | T11-0125 ↗ |
| Bulgaria | 2019-01-01 | 5% | 5% | 5% equipment / 10% other | T11-0126 ↗ |
| China | 2006-10-01 | 5% | 5% (domestic; cap 10%) | 10% | T11-0101 |
| Cyprus | 2019-03-01 | 5% (conditions apply) | 0% | 5% equipment / 8% other | T11-0127 ↗ |
| Czech Republic | 2013-05-01 | 5% | 0% | 10% | T11-0128 ↗ |
| Egypt | 2017-07-01 | 5% (conditions apply) | 5% (domestic; cap 10%) | 10% (conditions apply) | T11-0103 |
| Ethiopia | 2016-10-01 | 5% | 5% | 7.5% | T11-0129 ↗ |
| Georgia | 2019-04-01 | 5% | 5% | 5% equipment / 8% other | T11-0131 ↗ |
| Germany | No comprehensive treaty — domestic rates apply | T11-0115 | |||
| Greece | 2010-05-01 | 5% | 5% | 10% | T11-0132 ↗ |
| Hong Kong SAR | 2018-09-01 | 5% | 0% | 5% equipment / 8% other | T11-0117 |
| Hungary | 2015-05-01 | 5% | 0% | 5% equipment / 8% other | T11-0133 ↗ |
| India | 2006-11-01 | 5% | 5% (domestic; cap 10%) | 10% | T11-0102 |
| Ireland | 2012-12-01 | 5% (conditions apply) | 0% | 5% equipment / 8% other | T11-0134 ↗ |
| Italy | 2009-12-01 | 5% (conditions apply) | 5% | 10% | T11-0109 |
| Japan | 2011-09-01 | 5% (conditions apply) | 5% (domestic; cap 10%) | 5% equipment / 10% other | T11-0112 |
| Jordan | 2017-09-01 | 5% | 5% | 7% | T11-0114 ↗ |
| Kazakhstan | 2016-09-01 | 5% | 5% (domestic; cap 10%) | 10% | T11-0135 ↗ |
| Korea | 2008-12-01 | 5% (conditions apply) | 5% | 5% equipment / 10% other | T11-0113 |
| Kosovo | 2020-08-01 | 5% | 5% | 5% equipment / 10% other | T11-0136 ↗ |
| Kuwait | 2025-08-01 | 5% | 0% | 10% | T11-0118 |
| Kyrgyzstan | 2015-10-01 | 0% | 0% | 7.5% | T11-0137 ↗ |
| Latvia | 2021-07-01 | 5% (conditions apply) | 5% | 5% equipment / 7% other | T11-0138 ↗ |
| Luxembourg | 2014-09-01 | 5% | 0% | 5% equipment / 7% other | T11-0139 ↗ |
| Malaysia | 2007-07-01 | 5% | 5% | 8% | T11-0140 ↗ |
| Malta | 2012-12-01 | 5% | 0% | 5% equipment / 7% other | T11-0141 ↗ |
| Mauritania | 2025-01-01 | 5% | 0% | 7% | T11-0142 ↗ |
| Mexico | 2018-03-01 | 5% | 5% / 10% (conditions apply) | 10% | T11-0143 ↗ |
| Netherlands | 2010-12-01 | 5% (conditions apply) | 5% | 7% | T11-0110 |
| North Macedonia | 2016-05-01 | 5% | 5% | 10% | T11-0145 ↗ |
| Pakistan | 2006-12-01 | 5% (conditions apply) | 5% (domestic; cap 10%) | 10% | T11-0107 |
| Poland | 2012-06-01 | 5% | 5% | 10% | T11-0146 ↗ |
| Portugal | 2016-09-01 | 5% / 10% (conditions apply) | 5% (domestic; cap 10%) | 8% | T11-0147 ↗ |
| Romania | 2012-07-01 | 5% | 5% | 10% | T11-0148 ↗ |
| Russia | 2010-02-01 | 5% | 5% | 10% | T11-0149 ↗ |
| Singapore | 2011-07-01 | 5% | 5% | 8% | T11-0111 |
| Slovakia | 2024-08-01 | 5% | 5% (domestic; cap 10%) | 10% | T11-0150 ↗ |
| South Africa | 2008-05-01 | 5% / 10% (conditions apply) | 5% | 10% | T11-0151 ↗ |
| Spain | 2008-10-01 | 5% (conditions apply) | 5% | 8% | T11-0152 ↗ |
| Sweden | 2016-08-31 | 5% / 10% (conditions apply) | 0% | 5% equipment / 7% other | T11-0153 ↗ |
| Syria | 2010-10-01 | 0% | 5% (domestic; cap 7.5%) | 15% | T11-0155 ↗ |
| Tajikistan | 2015-06-01 | 5% / 10% (conditions apply) | 5% (domestic; cap 8%) | 8% | T11-0156 ↗ |
| Tunisia | 2013-01-15 | 5% | 2.5% / 5% (conditions apply) | 5% | T11-0157 ↗ |
| Turkey | 2009-04-01 | 5% (conditions apply) | 5% (domestic; cap 10%) | 10% | T11-0106 |
| Turkmenistan | 2017-04-01 | 5% (domestic; cap 10%) | 5% (domestic; cap 10%) | 10% | T11-0158 ↗ |
| Ukraine | 2012-12-01 | 5% / 15% (conditions apply) | 5% (domestic; cap 10%) | 10% | T11-0159 ↗ |
| United Arab Emirates | 2019-04-01 | 5% | 0% | 10% | T11-0105 |
| United Kingdom | 2009-01-01 | 5% (conditions apply) | 0% | 5% equipment / 8% other | T11-0104 |
| United States | No comprehensive treaty — domestic rates apply | T11-0116 | |||
| Uzbekistan | 2010-11-01 | 5% (domestic; cap 7%) | 5% (domestic; cap 7%) | 10% | T11-0160 ↗ |
| Venezuela | 2016-12-01 | 5% | 5% | 8% | T11-0161 ↗ |
| Vietnam | 2011-02-01 | 5% / 12.5% (conditions apply) | 5% (domestic; cap 10%) | 7.5% / 10% (conditions apply) | T11-0162 ↗ |
Frequently asked questions
Is withholding tax the final tax for the non-resident?
Withholding tax is charged on the full amount paid, with no deduction for the non-resident’s costs. Where the non-resident has a treaty PE in the Kingdom, it is instead taxed by assessment on the net profit attributable to the PE, and payments that are income of the PE are outside WHT.
Do remote services create a permanent establishment?
No. A service PE needs services furnished through personnel physically within the Kingdom beyond the treaty threshold. Remote services provided online or from abroad never create a service PE, however long the contract.
Is there a minimum period before a construction site becomes a PE?
Not under Saudi domestic law, which sets no minimum duration. Treaty time tests (such as 6 months or 183 days) apply only where a treaty applies.
Can technical service fees be relieved under a treaty?
Most Saudi treaties have no technical-fees article. ZATCA’s view is that service fees are business profits, taxable in the Kingdom only through a PE, so the 5% domestic WHT can be relieved — but only through the at-source or refund procedure. Some treaties place technical services inside the royalty article.
What is the principal purpose test?
Saudi Arabia ratified the MLI and adopted the principal purpose test for its covered treaties: a treaty benefit is denied if obtaining it was one of the principal purposes of an arrangement, unless granting it fits the treaty’s object and purpose.
What can we do if we are taxed contrary to a treaty?
Present a mutual agreement procedure case to either competent authority, generally within 3 years of first notification. Some older treaties have shorter windows.
Does a warehouse in Saudi Arabia create a PE?
The treaty exemption for storage, display or delivery facilities applies only to genuinely preparatory or auxiliary activity, and cannot be obtained by splitting activities among closely related enterprises.
Which treaties took effect for WHT on 1 January 2026?
The Saudi–Kuwait treaty (in force 1 August 2025) and the Saudi–Mauritania treaty (in force 1 January 2025) apply to amounts paid from 1 January 2026.
General information only, not tax or legal advice. Laws change; check the official Arabic text or speak to a qualified adviser before acting.
Rules cited on this page
Each statement above names the library row it comes from. The law and article, the date the row was last verified against the official source, and a link to the official text where one is held are listed here.
| Row | Law / article | Verified on | Official text |
|---|---|---|---|
| T02-0600 | Income Tax Law Art. 68; Income Tax IR Art. 63(1); WHT DTA Circular (Jan 2025) paras 2.2 and 3.1 | 2026-10-04 | — |
| T02-0611 | Income Tax IR Art. 63(8) | 2026-10-04 | — |
| T02-0850 | ZATCA Circular 'Taxation of Permanent Establishments in the context of DTAs', Publication No. 2303001, 17 May 2023, ss.2.3-2.3.4 | 2026-10-04 | official text ↗ |
| T02-0852 | PE Circular s.2.3.2; DTA Art. 5(5)-(6) | 2026-10-04 | — |
| T02-0856 | PE Circular ss.3.1.1.4 and 3.1.2; Income Tax Law | 2026-10-04 | — |
| T11-0118 | Saudi Arabia–Kuwait double tax treaty | 2026-10-05 | — |
| T11-0142 | Saudi Arabia–Mauritania double tax treaty | 2026-10-05 | official text ↗ |
| T11-0400 | ZATCA Tax Circular 'Implementation of WHT under DTAs' v1 Jan 2025, s.4.1-4.2 | 2026-10-05 | — |
| T11-0405 | Circular s.3.2.8-3.2.11; treaty Arts 10-12 | 2026-10-05 | — |
| T11-0406 | MLI Art 7(1); ZATCA 'MLI Convention' note (Jul 2020) s.3-4; KSA MLI position Art 2 list | 2026-10-05 | — |
| T11-0407 | Circular s.3.2.2 (DTAs take precedence to give relief); IR Art 63(1) rates | 2026-10-05 | — |
| T11-0408 | WHT-DTA Circular s.3.2.5 example and s.3.2.11; PE Circular 2303001 s.3.2.1-3.2.2.3; Kuwait DTA Art 13 | 2026-10-05 | — |
| T11-0409 | PE Circular 2303001 (17 May 2023) s.3.1.1.2-3.1.1.3, Examples 1-4 | 2026-10-05 | — |
| T11-0410 | MLI Arts 14-15; KSA MLI position (no reservation) | 2026-10-05 | — |
| T11-0411 | PE Circular s.3.1.1.4, 3.1.2; Income Tax Law Arts 4, 7; WHT Guideline decision tree | 2026-10-05 | — |
| T11-0413 | Circular s.3.2.7; treaty Art 8 texts | 2026-10-05 | — |
| T11-0414 | Treaty Art 5(5)-(6); MLI Art 12 | 2026-10-05 | — |
| T11-0415 | MLI Art 13(2) Option A, 13(4); KSA MLI position | 2026-10-05 | — |
| T11-0416 | MLI Art 16; KSA MLI notifications; ZATCA MAP e-service eServices-93 | 2026-10-05 | — |
| T11-0417 | Each treaty's final clause | 2026-10-05 | — |
| T11-0418 | BMF DBA status list 1 Jan 2026; IRS treaty A-Z list (checked 5 Oct 2026); Income Tax Law Art 68; IR Art 63 | 2026-10-05 | — |
| T11-1300 | Income Tax Law RD M/1 of 15/1/1425H, Art. 4(a)-(b) (BOE Arabic, read 5 Oct 2026) | 2026-10-05 | official text ↗ |
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