Corporate taxpayers in the Kingdom of Saudi Arabia (KSA) must remit withholding tax (WHT) on payments to non‑residents quickly. The golden rule is simple: pay by the 10th day of the month following the month of payment or accrual. Miss it, and late‑payment surcharges can start compounding. This guide explains deadlines, practical scheduling, penalty math, and steps finance teams can implement today to stay penalty‑free.
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At‑a‑Glance: The 10‑Day WHT Rule
Who is impacted?
- Saudi resident entities and permanent establishments making payments to non‑residents.
- Typical payments: service fees, royalties, technical services, management fees, interest, dividends, and rent.
What is due & when?
- WHT payment and monthly return are due by the 10th day of the month following the month in which the amount was paid or accrued.
- Annual WHT summary is typically due after year‑end (keep a close internal calendar).
Tip: If you post the expense in August and pay in September, assess WHT on the earlier of accrual or payment per your facts, then track the 10‑day clock accordingly.
Payment Calendar Examples (2025–2026)
| Payment / Accrual Month | WHT Return & Payment Due (10‑Day Rule) | Illustration |
|---|---|---|
| August 2025 | 10 September 2025 | Fees to a non‑resident consultant invoiced and recorded in Aug → WHT due by 10 Sep 2025. |
| December 2025 | 10 January 2026 | Year‑end royalties accrued Dec 28 → WHT due by 10 Jan 2026 even if paid later. |
| March 2026 | 10 April 2026 | Service fee paid Mar 15 → WHT due by 10 Apr 2026. |
Best practice: Close WHT for the prior month by the 5th working day, leaving buffer time for approvals and banking cut‑offs.
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Common WHT Rates You’ll See on Corporate Payments
| Payment Type | Typical Domestic WHT Rate | Notes for Finance Teams |
|---|---|---|
| Dividends to non‑residents | 5% | Check treaty relief (if applicable) and beneficial ownership. |
| Interest | 5% | Validate debt vs. services; ensure arm’s‑length pricing/support. |
| Royalties | 15% | Includes IP, know‑how, software license fees in many cases. |
| Services (e.g., management/technical) | Variable (commonly 5%–20%) | Rate depends on service category and source rules; classify correctly. |
Always verify: Contract scope, place of performance, and double tax treaty provisions before applying a reduced rate.
Penalty Mechanics: How the 10‑Day Rule Bites
Late Payment Surcharge
Late WHT typically attracts a 1% surcharge of unpaid tax for each 30 days (or part) after the due date. This can stack across months until paid.
Example: If SAR 300,000 WHT is paid 65 days late, the surcharge ≈ 3% (three 30‑day blocks counted by “or part”) → SAR 9,000.
Other Exposures
- Under‑withholding: You may owe the shortfall plus surcharges.
- Incorrect filing: Can trigger additional penalties and assessments.
- Treaty misuse: Risk of retroactive denial of reduced rates.
Don’t batch late! Waiting to “catch up” next month compounds surcharges and signals weak controls.
10‑Step Workflow to Stay Penalty‑Free
- Vendor onboarding: Flag non‑resident payees; capture tax residency, treaty status, and beneficial owner confirmations.
- Contract review: Map each fee line to a WHT article/category and domestic rate; document the rationale.
- E‑invoicing sync: Align invoicing events with accrual vs. payment so the 10‑day clock is not missed.
- Cut‑off calendar: Publish a monthly WHT calendar; set internal due date = Day 6.
- Rate validation: Check treaty relief and attach forms/certificates before payment.
- Calculation sheet: Maintain a standard WHT workbook with rate, base, gross‑up logic, and journal entries.
- Approval matrix: Pre‑approve WHT payments with dual signatories to avoid bank delays.
- Portal filing: File monthly WHT return and pay via ZATCA portal well before Day 10.
- Reconciliation: Tie WHT ledger to vendor sub‑ledgers and bank statements monthly.
- Annual summary: Prepare and file on time; investigate variances vs. monthly filings.
Automation idea: Trigger an alert whenever a non‑resident vendor invoice is posted for >SAR 0—auto‑start a WHT checklist.
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Frequent Mistakes That Trigger WHT Penalties
- Starting the 10‑day clock from payment date only and ignoring accrual timing.
- Wrong service classification (e.g., treating technical services as general services) leading to under‑withholding.
- Missing treaty paperwork (residency certificate, beneficial ownership proof, limitation‑of‑benefits tests).
- Bank cut‑off misses on the 9th/10th; funds hit the next day.
- Gross‑up clauses overlooked, causing unexpected cash outflow and higher WHT base.
Quick Math: WHT, Gross‑Up & Late Surcharge
Gross‑Up Formula
If contract says “payee must receive SAR N net”, gross‑up WHT:
WHT = (Net × Rate) ÷ (1 − Rate)
Gross Payment = Net ÷ (1 − Rate)
Late Surcharge Estimator
Surcharge ≈ 1% × Unpaid WHT × Blocks, where Blocks = number of 30‑day periods (or part thereof) after due date.
Example: Unpaid WHT SAR 120,000, 31 days late → Blocks = 2 → Surcharge ≈ SAR 2,400.
Month‑End WHT Compliance Checklist (Saudi Arabia)
- ✅ Non‑resident payee flagged and categorized.
- ✅ Contract/service classification reviewed; correct WHT rate applied.
- ✅ Treaty paperwork (if any) validated and on file.
- ✅ WHT worksheet prepared; gross‑up checked.
- ✅ WHT return drafted and peer‑reviewed by Day 6.
- ✅ Approval obtained and bank payment scheduled by Day 8.
- ✅ Filing & payment submitted via ZATCA portal by Day 9.
- ✅ Reconciliation posted; evidence archived.
FAQs: Saudi Arabia WHT Deadlines & Penalties
What happens if Day 10 falls on a weekend/holiday?
Plan to file/pay before the weekend or public holiday to avoid timing risks and bank cut‑offs.
Do I count from accrual or payment?
Track both; the obligation is tied to the transaction facts and when the amount becomes payable/paid. Align your policy with contracts and local rules, and document the position.
Can I amend a filed WHT return?
Yes, amendments are generally possible; prepare supporting workpapers and explain the change. Pay any shortfall promptly to limit surcharges.
How do treaties impact the 10‑day deadline?
Treaties can change the rate, not the deadline. The 10‑day rule still applies unless a specific relief mechanism applies.
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Action Items for Saudi CFOs & Tax Managers
- Implement a WHT cut‑off calendar with internal target on Day 6.
- Build a vendor treaty file (residency, BO, LoB tests) refreshed annually.
- Automate alerts from your ERP when non‑resident vendor invoices are posted.
- Run quarterly WHT health checks comparing contracted rates vs. applied rates.
Work With Us
We help Saudi corporates design robust WHT processes—classification, treaty validation, filing calendars, and reconciliations—so you never miss the 10‑day deadline again. For collaborations, sponsored placements, or guest posting on Saudi corporate tax topics, email [email protected].
