Tax Alert: ZATCA releases a tax bulletin on the applica

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In January 2025, the Zakat, Tax, and Customs Authority (ZATCA) released a tax bulletin providing explanation and guidance on the application of withholding tax (WHT) under double tax avoidance agreements (DTAAs) signed between Saudi Arabia and other countries. These guidelines are mostly consistent with those issued previously on 20 April 2022 with a few key changes.

Major highlights:

The bulletin explains, with examples, the withholding tax treatment and applicable rates on types of income a non-resident may earn from sources in the Kingdom as per the Income Tax Law and its bylaws.
The bulletin does not specifically mention “Form Q7B” as ZATCA’s approved form for claiming DTAA benefits.
Unlike the guidelines issued on 20 April 2022, this bulletin does not address the claim of DTAA benefits for dividends, income from debt claims, and royalties solely through the refund approach.
The bulletin requires taxpayers to apply for DTAA benefits through ZATCA’s electronic portal. It also limits the period to five years within which the application for DTAA must be submitted, or ZATCA may conduct a tax audit.

Benefits under DTAA can be claimed through two methods:

A. Availing benefits at source:

To apply for benefits at source, the applicant must upload the following documents via the electronic portal:

Tax Residency Certificate (TRC) of the non-resident from the foreign tax authority. Previously, tax residency had to be proved to ZATCA through form Q7B, however, in the footnotes to the bulletin, it is mentioned that no specific format is required for this certificate as ZATCA will accept the format of the relevant foreign tax authority.
A request form for the application of an effective DTAA, through a form approved by ZATCA. We understand that ZATCA will prescribe a form for this.
Documents attested by the embassy of the Kingdom of Saudi Arabia in the non-resident’s country or an Apostille certificate from the foreign country.
An undertaking by the resident taxpayer (Form Q7C).

ZATCA will review the application and approve it if the benefits claimed under the relevant DTAA are applicable.

B. Refund approach:

To claim DTAA benefits through the refund approach, the following documents must be submitted to ZATCA:

Tax Residency Certificate (TRC) of the non-resident from the foreign tax authority.
A letter of authorization from the non-resident beneficiary to the resident taxpayer to receive the refund amount on behalf of the non-resident beneficiary.
A request form for the application of an effective DTAA, according to the forms approved by ZATCA.

The required documents, as detailed above, must be attested by the embassy of the Kingdom of Saudi Arabia in the non-resident’s country, or an Apostille certificate from the foreign country must be submitted instead.
A copy of the relevant WHT return, along with the payment proof is to be provided.
An affidavit is to be provided from the resident taxpayer, certified by the Chamber of Commerce, stating that the amount requested for refund has not previously been refunded or transferred to another taxpayer or settled against another obligation.

Key takeaways for taxpayers:

Taxpayers have five years to submit an application to ZATCA through ZATCA’s online portal to legitimize their claim of DTAA benefits at source.
Taxpayers may analyze the contractual arrangements with non-residents to effectively avail the benefits of DTAAs.
Timely planning is necessary to ensure that required treaty documents (such as TRC, etc.) are available enabling taxpayers to apply for DTAA benefits within the prescribed time period.
ZATCA has imposed a five-year time limit for conducting WHT audits; therefore, accelerated WHT audits may be expected. Hence, pending treaty claims should be expedited.

If you require any support or assistance with the WHT treatment and to avail the benefits of DTAAs, please reach out to our team of tax experts.