On 23 May 2018, the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA) signed an agreement for the avoidance of double taxation and the prevention of fiscal evasion in taxes on income and capital Double Taxation Convention (DTA). Both countries apply the imputation method to eliminate double taxation. A provision also includes a tax savings credit for taxes that have been exempted or reduced in a Contracting State for a limited period of time in accordance with the laws and regulations of that State on investment incentives. This agreement is the first DVB-T among the members of the Gulf Cooperation Council (GCC). The DTA entered into force on 1 April 2019 and generally applies from 1 January 2020. The Commission could offer a reduction or potential exemption from Saudi Arabia`s withholding tax (WHT) in respect of Saudi Arabia`s payments to the United Arab Emirates. You can apply reduced rates or full relief at checkout. The following conditions apply to taxpayers who opt for the automatic application of DVB-T: consulting and technical services and telecommunications services (with the exception of payments to the registered office or to an affiliated company), rent, air tickets or air freight or sea freight, dividends, interest on loans, insurance or reinsurance premiums In Saudi Arabia, there is a corporate tax rate of 20%. The Treaty provides that a permanent establishment is deemed to be constituted if an enterprise provides services by employees or other employed persons, if the activities for the same or a related project in a Contracting State are continued for a period or periods of more than 6 months in total in a period of 12 months. There is currently no indirect tax, with the exception of customs duties on certain imports, which are levied at rates between 5% and 20%. All information contained in this document is aggregated by KPMG Professional Services, a Saudi company, a member firm of kpmg`s global organization of independent member firms affiliated with KPMG International Limited.

Payments for services at the registered office or to a related party Below are the WHT rates of the contract for payments from Saudi Arabia to recipients in the contracting countries. Any tax treaty must be carefully considered, as there may be exceptions to the general rules. Natural and legal persons, including public authorities, are required to provide the tax authorities with information on contracts for services and supplies and on any amendments to such contracts concluded with a person in the private sector within a maximum period of 3 months from the date of signature of the contract. The national interest rate on WHT is 5% on dividends, 5% on interest and 15% on royalties. By aligning our thinking with your talent management goals, we can help you plan and manage your global workforce. Non-residents who receive income from Saudi sources may be subject to withholding tax at rates between 5% and 20%, depending on the type of service: Normally, the statutes of a contract do not deal with technical services (except Vietnam/Malaysia, where this is part of the royalties), so the country of origin should not have a tax law unless an MOU is created by the resident. non-Saudi. The treaty with Spain also does not contain an article on the “EP service”. In fact, the supply of technical services provided entirely outside Saudi Arabia or other undefined services should be taxable only in the country of residence.

There are currently no exchange controls in Saudi Arabia. . Individuals must obtain a work permit to work in Saudi Arabia. Saudi Arabia has concluded tax agreements with several countries. Treaties that are currently entering into force or are about to take effect are listed below. Only the self-employed are subject to income tax in Saudi Arabia. Fees, advisory and technical services, as well as international telecommunications services paid to the registered office or to an affiliate The double taxation treaties to which Saudi Arabia is a party are currently in force The GAZT offer the choice of automatic application of the relevant tax treaty without going through the refund procedure. The election is given to residents of Saudi Arabia or PEs of non-residents who make payments subject to WHT in Saudi Arabia. *Pension, unemployment and occupational contributions are calculated as a percentage of the basic salary and the housing allowance.

DTTs have not yet been effectively tested in Saudi Arabia. However, they generally follow the OECD model treaty and can offer some relief, including whT on dividends, interest and royalties. The WHT must be paid within the first ten days of the month following the month in which the payment was made. Payments made by a resident or PE party to a non-resident party for services rendered are subject to wht. Rates vary between 5%, 15% and 20%, depending on the type of service and whether the beneficiary is a related party. Taxable income is the gross amount of income and includes income, profits, profits of any kind and any form of payment resulting from the exercise of the activity. Gross income includes capital gains and ancillary income, but excludes certain tax-exempt income. As mentioned above, the GAZT offers a choice; Taxpayers can continue to withhold taxes and comply with the refund procedure.

Under Saudi tax legislation (which entered into force on 30 July 2004), resident companies (on shares of non-Saudi/GCC shareholders) and non-residents who do business through a permanent establishment in the Kingdom are subject to the 20% corporate tax in Saudi Arabia. A company is considered a resident company if it was established in accordance with Saudi corporate regulations or if its central control and administration are located in the Kingdom. As companies go global, few companies seem to understand the risks that business travel can entail. There are currently no official transfer pricing rules in Saudi Arabia. However, the Saudi tax authorities are in the process of introducing transfer pricing rules in line with current international rules. However, an internal GAZT circular should be taken into account when applying for reimbursement of WHT from non-residents. The circular refers to the interpretation of EP services (Article 5(3)(b), not OECD, but United Nations model). Taxpayers must register with the tax authorities and open a tax file: income tax | | social security compliance obligations | Other.. .