2026 brought several developments in Saudi Arabia’s tax treaty network. Some directly affect withholding tax rates on payments to non-residents; others do not change rates at all. Here is what happened and what it means in practice.
1. Bahrain: a new treaty moving towards entry into force
- The Saudi–Bahrain double tax treaty was concluded in 2025.
- The Saudi Council of Ministers approved it on 21 April 2026.
- Bahrain ratified it on 14 June 2026.
What this means: reduced treaty rates apply only once a treaty has entered into force under its own terms — which can differ from the approval or ratification date. If you pay Bahraini parties (services, royalties, interest, dividends), confirm the announced entry-into-force date before applying any reduced rate.
2. Canada: negotiations launched
In July 2026 Saudi Arabia and Canada announced that they had agreed to start negotiating a double tax treaty. No treaty is in force, so payments to Canadian parties remain subject to full statutory withholding rates.
3. New Zealand: a new negotiating round
A new round of treaty negotiations with New Zealand was scheduled for April 2026, following first talks in 2017. Still no treaty in force.
4. United States: information exchange, not tax relief
On 14 April 2026 Saudi Arabia and the United States signed a Tax Information Exchange Agreement. A common misunderstanding to avoid:
- This is not a double tax treaty.
- It does not reduce withholding rates or allocate taxing rights.
- Its effect is transparency: exchange of tax information between the two authorities on request.
Payments to US parties therefore remain subject to statutory withholding rates (5%, 15% or 20% depending on the payment type).
What should your company do now?
- Map your non-resident payees by country and identify those resident in a country with a treaty in force with Saudi Arabia.
- Do not apply a reduced rate without documents: the payee’s tax residency certificate and the forms ZATCA requires, at the right time.
- If you withheld at the full rate and the payee was entitled to relief, it may be possible to reclaim the difference under the procedures.
- Track the Bahrain treaty’s entry-into-force date before changing any rate on Bahraini payments.