Saudi WHT Refund for UAE Companies: Can You Recover Tax If You Pay 0% Corporate Tax in UAE?
As cross-border business between UAE and Saudi Arabia grows, many UAE-based service providers are finding themselves subject to Withholding Tax (WHT) on payments from KSA clients. Even when services are performed remotely, KSA law requires local companies to deduct WHT at source for payments to non-resident firms.
But here’s the question many UAE businesses are asking:
If we don’t pay Corporate Tax in the UAE (due to 0% bracket or Small Business Relief), can we still recover WHT deducted in Saudi Arabia?
Let’s break it down.
WHT in Saudi Arabia
A Quick Recap Saudi Arabia applies WHT on payments to non-residents based on ZATCA’s tax rules, even if services are rendered from outside KSA. Common rates include:
- 5% for technical or consulting services (third party)
- 15% for related-party services
- 20% for management fees
- 15% for royalties
This WHT often creates a cash flow and tax cost burden for UAE businesses—especially SMEs.
Fortunately, UAE and KSA have a Double Taxation Agreement (DTA), and Saudi Arabia’s ZATCA provides two options to deal with WHT:
- Benefit at Source – Avoid deduction in advance
- Refund Mechanism – Claim refund if tax was deducted
This post focuses on the refund path, especially when the UAE company is subject to 0% tax or Small Business Relief.
How UAE Corporate Tax Law Impacts WHT Recovery?
The UAE Corporate Tax Law allows a foreign tax credit only if the company has UAE tax payable. That means:
So what happens to WHT deducted in KSA when FTC is not available in the UAE?
You can apply for a full refund from ZATCA—regardless of your UAE tax position.
This is a critical point: WHT can be refunded in Saudi Arabia even if you can’t credit it in the UAE.
How to Claim a WHT Refund in Saudi Arabia?: Step-by-Step Guide
If your KSA client already deducted WHT, here’s how you can recover it using ZATCA’s refund procedure:
Documents Required
- Tax Residency Certificate (TRC) from UAE FTA, authenticated by the Saudi Embassy
- Form Q/7B completed by the UAE company
- Form Q/7C submitted by the KSA client
- Copy of WHT return & payment receipt
- Authorization letter from the UAE company to the KSA client to receive the refund (authenticated)
- Letter from KSA client (attested by KSA Chamber of Commerce) stating refund has not been claimed elsewhere.
Submission Process
- The KSA client compiles and submits the documents via the ZATCA portal
- ZATCA reviews and may conduct an audit
- Upon approval, the refund is paid to the KSA client’s IBAN, who must then transfer it to the UAE service provider
Timeline
Refund applications must be submitted within 5 years from the WHT payment date
Key Considerations for UAE Companies
- Even if you pay 0% tax in UAE, you’re entitled to a WHT refund from KSA, as long as you follow ZATCA procedures.
- Always coordinate with your KSA client in advance to ensure they retain records and support your application.
- Maintain a strong audit trail: TRC, agreements, invoices, and ZATCA portal screenshots.
- If you frequently work with KSA clients, consider applying for benefit at source in future to avoid WHT altogether.
Final Thoughts
Many UAE businesses assume that WHT deducted in KSA is a sunk cost—especially if they fall under the UAE’s 0% corporate tax bracket or Small Business Relief.
But that’s not true.
With the right documentation and client coordination, ZATCA allows full refund claims, ensuring your company doesn’t pay more tax than necessary.
So whether you’re a consultant, tech service provider, or advisor doing business in Saudi Arabia—don’t let WHT eat into your profit. Act early, stay compliant, and reclaim what’s yours.
Need help navigating the refund process or preparing the required forms? Let’s connect.
