TaxSavvySA

Royalty for software licence

We pay a US company for software licence. WHT?

The situation

Royalties paid to non-residents are subject to 15 percent WHT unless a treaty reduces it. The payer withholds and pays it by the 10th of the month after payment.

The law

  • Art 68, Income Tax Law and Art 63, Implementing Regulations: Residents and PEs withhold tax on payments to non-residents from a Saudi source at 5, 15 or 20 percent

What it means for you

Software licence fees are often royalties at 15 percent. Example: SAR 80,000 x 15 percent = SAR 12,000. Some software payments may be services instead, depending on what is supplied. Apply the domestic rate unless you confirm that a tax treaty with the supplier's country gives relief and you hold its residency certificate.

What to do

  1. Classify.
  2. Check treaty.
  3. File.

We can do this for youMonthly withholding tax on payments to non-residents: rates, return and payment by the 10th: SAR 750

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