• Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 8/21/2013

Saudi Arabia - Procedures for claiming treaty withholding tax rates 

August 21:  The Saudi Arabia tax authorities (DZIT) issued guidance concerning how to claim reduced withholding tax rates under the income tax treaties to which Saudi Arabia is a treaty partner.

Under the guidance—Circular No. 5068/16/1434—a Saudi Arabian entity making taxable payment to a nonresident entity can apply the provisions of an effective income tax treaty if the Saudi entity complies with certain requirements, including that it:

  • Reports all payments to nonresident parties in the monthly withholding tax returns
  • Submits a formal request for application of the tax treaty provisions, and includes a tax residency certificate issued from the tax authorities in the country where the payment recipient resides
  • Submits that it will be liable for and pay any tax or penalty arising if the non-resident payee submits incorrect information or because of a computation error or misinterpretation of the provisions of tax treaty

Income tax treaty with Luxembourg

In other treaty-related news, a newly signed income tax treaty between Saudi Arabia and Luxembourg contains provisions that are similar to those in the income tax treaties between Saudi Arabia and the United Kingdom, Ireland, and Malta.

Read an August 2013 report [PDF 2 MB] prepared by the KPMG member firm in Saudi Arabia: Saudi Arabia Tax and Zakat Alert (August 2013)

Covered in the KPMG report are the following topics:

  • Saudi Arabia signs OECD’s convention on tax secrecy
  • Tax exemptions
  • Deemed services portion of contracts
  • Tax case when withholding tax is applicable on payments only
  • DZIT focus area - Arabization
  • Deduction of fixed assets for Zakat purposes - change in approach
  • Tax and Zakat filing season
  • DZIT - More open to dialogue and reach settlement / agreement with taxpayers

©2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International.

KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.

The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Direct comments, including requests for subscriptions, to
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.


Share this

Share this


Subscribe to receive the latest TaxNewsFlash email alerts (you must select the option for TaxNewsFlash)

Already a Subscriber? Login

Not a member? Subscribe now