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Withholding Tax
Every business needs to have a comprehensive & effective tax strategy in place to keep the business sound. Withholding Tax (WHT) is imposed on most payments made by a Saudi Arabian entity to any party that is not a resident of KSA for their services. The Saudi Arabian entity is required by law to retain the applicable tax amount from the payment to the foreign entity and settle it to the GAZT (General Authority of Zakat & Tax in KSA).
Analytix helps our clients build a positive tax strategy that can increase their reputation in the Saudi Arabia Market, which helps your business stay up to date in the competitive market.
Withholding Taxes Rates in Saudi Arabia
WHT rates are based on the nature of the service provided and the relationship with the non-resident party. Withholding tax rates are as follows
Management fees – 20%
Royalty or License fees – 15%
Technical/Consulting Services – 5%
Interest – 5%
Dividends or profit remittances – 5%
Other Services – 15%
Compliance with Tax Obligations
Withholding Tax compliance promotes fairness in tax system.
Revenue Collection for the Government
Withholding Tax supports revenue collection for government.
Reduction of Tax Evasion and Fraud
Withholding tax helps reduce tax fraud and evasion.
Importance of Withholding Tax in Saudi Arabia
Withholding Tax is important in Saudi Arabia as it helps ensure that individuals and businesses comply with their tax obligations and support the government's revenue collection efforts. Withholding Tax also helps reduce tax evasion and fraud, promoting fairness and transparency in the tax system.
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