Global

Details

  • 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



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