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For the amount paid to be considered paid for tax withholding purposes, the following conditions must be met:

1- An amount paid by a resident or from a permanent establishment to a non-resident: The criterion here in the withholding tax in Saudi Arabia applies mainly to residence and not nationality, as the resident is the natural person or company to whom the residence conditions mentioned in Article Three of the income system apply, and the lesson The basic requirement of this condition is that the person who pays the amount is a resident of the Kingdom.

2- To be paid to a non-resident: It is required that the amount paid by the resident person or company be paid to a non-resident in the Kingdom of Saudi Arabia, and a non-resident person in Saudi Arabia is defined in the income system as “every person who does not qualify as a resident.”

3- That the amount be from a source of income in the Kingdom: Article Five of the Income Tax Law specifies the cases and sources in which the income is considered to be derived from a source in the Kingdom.

Calculating withholding tax in Saudi Arabia?

The value added tax in Saudi Arabia is calculated in a very simple way, and this can be done through the following simple equation:

Tax amount = value of supply excluding VAT x 15%

For example, if the price of the original product before adding the added value was about 80 riyals, then the tax amount is multiplied by 80 * 15% and then adding the result to the price of the original product, so the price of the final product after applying the tax becomes 92 riyals, and thus the formula becomes The final product price is as

Final product price = (original product price + tax amount or (original supply value x 15%))

Note: This equation is applied when selling by any method of sale, whether it is cash or credit sales, as all that matters is the original product price.