Understanding the Two Methods to Claim Benefits Under Saudi Arabia's Double Tax Avoidance Agreements

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In January 2025, the Zakat, Tax, and Customs Authority (ZATCA) of Saudi Arabia released a tax bulletin providing detailed guidance on the application of withholding tax (WHT) under the nation's Double Tax Avoidance Agreements (DTAAs). These agreements are designed to prevent the same income from being taxed in both Saudi Arabia and another country, thereby promoting cross-border trade and investment.

The bulletin outlines two primary methods through which taxpayers can claim benefits under DTAAs:

1. Availing Benefits at Source

This method allows taxpayers to apply DTAA benefits directly, reducing the WHT at the time of payment. To utilize this approach, the following documents must be submitted via ZATCA's electronic portal:

• Tax Residency Certificate (TRC): Issued by the foreign tax authority of the non-resident, confirming their tax residency status.

• DTAA Application Request Form: A form approved by ZATCA.

• Attested Documents: Relevant documents attested by the Saudi Arabian embassy in the non-resident's country or accompanied by an Apostille certificate from the foreign country.

• Undertaking by Resident Taxpayer (Form Q7C): A formal commitment from the resident taxpayer, as specified by ZATCA.

Upon submission, ZATCA will review the application and, if the claimed benefits are applicable under the relevant DTAA, approve the reduced WHT rate at the source.

2. Refund Approach

Alternatively, taxpayers can opt to pay the standard WHT rate at the time of payment and subsequently claim a refund for the excess amount withheld, as per the DTAA provisions. The following documents are required for this method:

• Tax Residency Certificate (TRC): As described above.

• Authorization Letter: A letter from the non-resident beneficiary authorizing the resident taxpayer to receive the refund amount on their behalf.

• DTAA Application Request Form: As described above.

Similar to the first method, the required documents must be attested by the Saudi Arabian embassy in the non-resident's country or accompanied by an Apostille certificate.

Key Considerations

• Five-Year Submission Period: Taxpayers have a five-year window to submit their application for DTAA benefits through ZATCA's online portal. Failure to apply within this period may result in a tax audit by ZATCA.

• Electronic Portal Usage: All applications and document submissions must be conducted through ZATCA's electronic portal, streamlining the process and ensuring efficient handling of requests.

By understanding and utilizing these methods, taxpayers can effectively navigate the complexities of international taxation and fully benefit from the provisions outlined in Saudi Arabia's DTAAs.

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