The Zakat, Tax, and Customs Authority (ZATCA) has published proposed amendments to the Income Tax Law for public consultation on the platform, Istitlaa, on 25 September 2023. The due date to submit comments and feedback on the proposed amendments is 25 October 2023.

In summary, the proposed amendments suggest the following Income Tax Law provisions:

  • Payments made to a natural person by an employer under an employment arrangement are not subject to withholding tax (WHT).
  • Bonuses paid to board members or those in similar positions are considered wages.
  • Payments made to non-resident entities classified as “transparent entities” are not subject to WHT to the extent of the share attributed to a resident of Saudi Arabia.
  • Refers the tax treatment of research and development expenses to the Income Tax Implementing Regulations.
  • New WHT rates and categories.

In detail

Article 68: Tax Withholding – Addition of two paragraphs:

  • Payments made to an employee against his work, whether in the form of wages, benefits, rewards, and the like, paid by employer to a natural person working for him or related to him by contractual relationship resembling an employee-employer relationship, or working for him according to his guidance or under his supervision, are not subject to withholding tax. Additionally, bonuses received by board members or those in similar positions are considered wages for system purposes.
  • Payments made to non-resident entities, organizations, partnerships, or establishments classified as transparent entities for tax purposes according to the jurisdiction of their residence are not subject to withholding tax, to the extent attributed to share of a resident person in the Kingdom.

Article 68: Tax Withholding – Amendment to paragraph (a) as follows:


Nature of payment

WHT Rate


Interest for loans between related parties, including bonds and Sukuk.









Dividend distribution

5%, excluding listed securities, funds’ investments abroad, and granting stocks.



10%, the regulation shall specify the application timeline and any exceptions to the withholding framework.

Article 16 – Proposes to remove the current wording related to research and development expenses from the law and replace it with wording that refers the taxpayer to the Income Tax Implementing Regulations to determine the tax treatment for research, development, and innovation expenses.

The proposed draft can be accessed through this link.

For detailed discussions on how the proposed amendments can affect your business, please contact our tax team:

Riyadh Office

Tareq Al Sunaid

Head of Tax

E: talsunaid@kpmg.com

Salam Eido

Senior Director, Head of Tax - Riyadh

E: seido@kpmg.com

Sadia Nazir

Senior Director, Head of Transfer Pricing and International Tax

E:   sadianazir@kpmg.com

Ali Sainudheen

Partner, Domestic Tax

E: asainudheen@kpmg.com

Stefan El Khouri

Partner, International Tax

E: selkhouri@kpmg.com

Jigna Sampath

Senior Director, Transfer Pricing/ Tax Leader, Financial Sector

E: jignasampath@kpmg.com


Ajay Garg

Principal, Indirect Taxes

E: gajay@kpmg.com

Oleg Shmal

Director, Indirect Taxes

E: oshmal@kpmg.com

Amr Alsaleh

Director, Domestic Tax

E: amralsaleh@kpmg.com

Jeddah Office

Faisal Tanvir

Partner, Head of Tax - Jeddah

E: ftanvir@kpmg.com

Anan Sijini

Director, Domestic Tax

E: asijini@kpmg.com

Khobar Office

Mohammad Kamran Sial

Partner, Head of Tax - Khobar

E: ksial@kpmg.com

Mohamed Gouda

Director, Domestic Tax

E: mohamedgouda@kpmg.com


Anil Bahl

Director, Indirect Tax

E: anilbahl@kpmg.com