Saudi Arabia withholding tax rates (Article 68): full schedule and worked examples
Saudi Arabia doesn't have one flat withholding rate for cross-border payments. Article 68 of the Saudi Income Tax Law (Royal Decree No. M/1 of 1425H) sets a tiered schedule that depends entirely on what the payment is for, and a 2023 ministerial resolution moved an entire category to a lower band — a change several guides online still miss. Any Saudi-resident payer — or the Saudi permanent establishment of a foreign one — that pays Saudi-source income to a non-resident with no PE in the Kingdom has to withhold at source, remit it to ZATCA, and report it on a monthly return. Pick the wrong category and you either under-withhold, which leaves the payer on the hook, or over-withhold and have to chase a refund. This page lays out the full current schedule, the three-way distinction that trips people up, and the deadline for paying ZATCA.
The Article 68 rate schedule (current law)
| Payment category | Withholding rate |
|---|---|
| Dividends | 5% |
| Interest / loan charges | 5% |
| Rent | 5% |
| Insurance and reinsurance premiums | 5% |
| International telecommunications services | 5% |
| Air tickets, air freight, and sea freight | 5% |
| Technical or consulting services | 5% |
| Royalties | 15% |
| Any other payment not named above (the catch-all) | 15% |
| Management fees | 20% |
Seven categories now share the lowest band, 5% — including technical or consulting services, which used to sit at 15% until Ministerial Resolution No. 25 (dated 8/01/1445H, 26 July 2023; in force from 15 September 2023) cut it, alongside international telecommunications services, regardless of whether the payment goes to a related party or an unrelated one. Royalties stay at 15%, alongside everything Article 68 doesn't name specifically. Management fees remain the outlier at 20%, the highest rate on the schedule, because the law treats directing someone else's operations as a more valuable, harder-to-price service than a defined technical or advisory engagement.
Three categories, not two — where people still get it wrong
Most guidance on this schedule online still treats it as a two-way call: catch-all at 15% or management fee at 20%. That's out of date, because technical or consulting services were carved out into their own 5% category in 2023, and a payment can land in any of three places:
- Technical or consulting services (5%) — a defined deliverable produced using specialist expertise: an engineering study, a legal opinion, a market analysis, a feasibility report. The payer receives a finished piece of work, not ongoing control over anything.
- The catch-all (15%) — administrative-style services that aren't technical or consulting in character: staff training, recruitment, bookkeeping, marketing support carried out in the Kingdom. This is where the pre-2023 15% rate still applies today.
- Management fees (20%) — compensation for directing or running part of the payer's own operations, such as a ship-management contract or an outsourced plant-management agreement, not for handing over a discrete deliverable.
The distinction between the first and third is control: a management fee buys ongoing authority over the payer's business, a technical or consulting fee buys a defined output with no operational control attached. The distinction between the first and second is subject matter: technical/consulting work applies specialist expertise to produce an analysis or report, while the catch-all covers administrative support that doesn't. When a contract's title is ambiguous, look at what was actually delivered, not what the invoice calls it.
Worked example: grossing up a net-of-tax fee
Cross-border contracts are sometimes written "net of tax": the non-resident is guaranteed to actually receive the agreed amount, and the Saudi payer absorbs the withholding tax on top. That changes the arithmetic, because the net figure in the contract isn't the amount you withhold tax from.
A Saudi company signs a ship-management contract with a non-resident operator for a net fee of SAR 200,000, with the Saudi company bearing any Saudi withholding tax. Ship management is a management fee, so the domestic rate is 20%. Since SAR 200,000 has to land in the operator's account after tax:
- Gross fee = net ÷ (1 − rate) = SAR 200,000 ÷ (1 − 0.20) = SAR 200,000 ÷ 0.80 = SAR 250,000
- Withholding tax = SAR 250,000 × 20% = SAR 50,000
- Check: SAR 250,000 − SAR 50,000 = SAR 200,000, the guaranteed net amount
The Saudi company's real cost is the SAR 250,000 gross fee, not the SAR 200,000 quoted in the contract — worth building into any net-of-tax negotiation before it's signed, not after the first invoice.
Worked example: cutting the rate with a treaty and a TRC
A tax treaty between Saudi Arabia and the non-resident's home country can reduce or eliminate a domestic Article 68 rate, but the reduction is never automatic. The non-resident has to produce a valid Tax Residency Certificate (TRC) confirming its residence in the treaty country before the Saudi payer applies anything other than the domestic rate. Without a TRC in hand at the time of payment, the payer must withhold at the full domestic rate and report it as such on that month's return.
A Saudi company pays a non-resident consultancy SAR 400,000 for a technical study. That's a technical/consulting service, so the domestic rate is 5%, not the catch-all: with no treaty relief, SAR 20,000 is withheld. If the consultancy is resident in a treaty country whose double-tax agreement with Saudi Arabia sets a 0% rate on technical service fees, and it provides a valid TRC before payment, the Saudi company applies 0% instead — nothing withheld, the full SAR 400,000 paid, with the treaty-rate application reported on the monthly return in place of the domestic rate. Skip the TRC step and the default 5%, SAR 20,000, applies regardless of what the treaty says on paper.
When the withheld tax is due
Withholding tax isn't an annual filing. Whatever is withheld on payments made during a given Gregorian month is due to ZATCA within the first ten days of the following month, alongside the monthly withholding tax return listing each payment, its category, and the rate applied. Miss that ten-day window and the exposure sits with the withholding agent — the Saudi payer — not the non-resident recipient.
Every mechanic above shows up somewhere in the Saudi tax practice questions: the dividend-versus-management-fee pairing, the royalty-versus-telecommunications pairing, the interest-versus-technical/consulting pairing (including the 2023 rate change itself), the ten-day remittance deadline, and the TRC treaty-relief procedure. Worth drilling once the mechanics above make sense on their own.
Source: Saudi Income Tax Law (Royal Decree No. M/1 of 1425H), Article 68, as in force for the 2026 tax year; Ministerial Resolution No. 25 (8/01/1445H, 26 July 2023), effective 15 September 2023, reducing the technical/consulting and international telecommunications services rate to 5%; PwC Worldwide Tax Summaries, Saudi Arabia — Corporate — Withholding taxes; ZATCA Tax Residency & Withholding Tax Certificate e-service guidance. This page is educational material for exam practice, not professional tax advice — confirm current rates and treaty positions with ZATCA or a licensed advisor before relying on them for an actual filing.