Withholding tax on payments to non-resident suppliers

When you pay a party that is not resident in Saudi Arabia for services, royalties and similar, you withhold part of the amount and pay it to ZATCA.

1. Set up the supplier

1. Open the supplier under Purchases → Suppliers.
2. In the Withholding tax section mark them non-resident and choose the type of payments, for example:

• technical and consulting services: 5%
• royalties: 15%
• management fees: 20%

2. When you pay

When you record a disbursement to this supplier, the tax is worked out for you:

• Deducted from the supplier: they receive the amount less the tax, and the tax is recorded as withholding tax payable.
• Borne by your company: they receive the full amount and the tax is recorded as your company's expense.

3. The monthly return

1. Open Reports → Withholding tax. Each month has a return with its payments and tax.
2. File and pay it on the ZATCA portal by the 10th of the following month.
3. Record the filing and then the payment on the page; the journal is posted.
4. Print the withholding certificate and give it to the supplier.

Double tax treaties can lower the rate; check with your tax adviser and set the right rate on the supplier.