Who bears WHT in contract
Contract says payment is net of taxes. What now?
The situation
If the payer bears the WHT, the base may be grossed up. This happens when the contract says the foreign supplier receives a fixed net amount.
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
If the contract says the foreign supplier receives a net amount, you bear the WHT and the base is grossed up. Example: net SAR 95,000 at 5 percent: gross SAR 100,000, WHT SAR 5,000. Draft future contracts to say who bears the tax.
What to do
- Read the contract.
- Gross up.
- File.
We can do this for youMonthly withholding tax on payments to non-residents: rates, return and payment by the 10th: SAR 750