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Saudi Arabia has mandated corporate tax rules for businesses gaining income from business activities conducted in the country. When non-residents of the country generate income from a source in Saudi Arabia, they should pay a Withholding Tax to the authorities.
The Saudi source of income, an individual or establishment that earns money for the non-residents, is known as a withholding person. The withholding person can be a government/ non-government establishment. According to the Income Tax Law (ITL) of Saudi Arabia, withholding tax is charged on the total income that is earned by non-residents from source/ sources in the country.
As mentioned above, non-residents should pay withholding tax if they earn income from a Saudi source. Have a look at entities that can be classified as these non-residents:
The amount of Withholding Tax that non-residents in KSA pay will entirely depend on the income they generate for a particular period from a Saudi source. Currently, the Withholding Tax rates in KSA are as follows:
Here are some important Withholding Tax obligations, deadlines, and exemptions you should be aware of:
All tax returns, whether WHT or otherwise, should be filed on time in Saudi Arabia to prevent tax notices and penalties issued by the authorities. If you get a tax evasion notice, you can be charged higher penalties than the usual rates in KSA. Here are the current WHT penalty rules in the country:
Ensure you organize all your income sources to have a detailed view for categorizing exempt and taxable income. Also, keep an eye on tax updates released by ZATCA to see whether there are changes to the current tax rates. This will help you compute taxes accurately and avoid penalties.
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