Withholding Tax in Saudi Arabia 2026: Complete Business Guide
Everything Saudi businesses need to know about Withholding Tax (WHT): rates, taxable payments, monthly filing, and correct journal entries.
Withholding Tax (WHT) is one of the most commonly mishandled taxes in Saudi Arabia, especially on payments to non-resident suppliers. The Zakat, Tax and Customs Authority (ZATCA) imposes penalties and late-payment interest that often exceed the tax itself. This practical guide covers everything you need in 2026.
What is Withholding Tax and when does it apply?
WHT is a tax that a Saudi-resident entity withholds when paying certain amounts to non-residents (individuals or companies) for services or usage rights. A percentage is deducted from the gross amount and remitted to ZATCA within the first 10 days of the month following payment.
Key WHT rates in 2026
5%
Rent, technical services, dividends, loan interest, international air tickets, insurance and reinsurance premiums.
15%
Management fees for services performed mainly by the foreign head office of the company.
15%
Royalties, IP rights, and consulting from related parties.
20%
Profits of a non-resident branch when remitted abroad (branch profits).
Correct accounting treatment
Worked example: A Saudi company receives consulting from a UK firm for SAR 100,000. Rate: 15%. Journal entry on accrual: • Dr. Consulting expense 100,000 • Cr. Supplier – UK firm 85,000 • Cr. WHT payable 15,000 When paid to ZATCA, the WHT-payable account is reduced against cash.
Monthly filing & required documents
File monthly via the ZATCA portal within 10 days of month-end and provide the non-resident supplier with a WHT certificate so they can claim treaty relief in their home country. The annual return is due within 120 days of fiscal year-end.
Common mistakes to avoid
Wrongly treating supplier as resident
Verify the Tax Residency Certificate before skipping WHT.
Late remittance
1% penalty per 30 days late plus additional surcharges until paid.
Not issuing WHT certificate
Deprives the supplier of treaty relief benefits.
SIDA automatically calculates WHT on non-resident supplier invoices, generates the correct journal entry instantly, and prepares the monthly filing report ready for ZATCA upload.