Tax Consultancy Services

WITHHOLDING
TAX IN THE UAE
& THE GCC

EXPERT CONSULTATION

WITHHOLDING
TAX IN DUBAI,
ABU DHABI &
THE UAE

Domestic Withholding Tax (WHT) of 0% is applicable on domestic and cross-border payments but there is no obligation to file WHT returns.

WITHHOLDING TAX IN THE GCC REGION

Within the GCC region, withholding tax is not applicable in the United Arab Emirates and Bahrain. Furthermore, in the UAE, no withholding taxes will be applicable on domestic and cross-border payments under the new UAE corporate tax regime.

Withholding tax is imposed in Saudi Arabia, Qatar, Kuwait, and Oman.

WHAT IS THE WITHHOLDING TAX RATE IN GCC COUNTRIES?

CountryWithholding Tax Rate
Saudi Arabia- 5% on technical fees, interest & dividends
- 15% on royalties, commissions, related party payments, and other services
- 20% on management fees
Qatar5% on fees, interests, royalties, commissions & other services
Kuwait5% of all payments
Oman10% of gross payments

WITHHOLDING TAX IN OMAN

Foreign companies which do not have a permanent establishment in Oman and yet realize their income from Oman are subject to a 10% Withholding Tax.

The Omani-based entity is required to file the tax return for withholding within 14 (fourteen) days from the end of the month in which the amount was paid or payment is due to the non-resident service provider. The statement of remittance is to be submitted electronically only through the Oman Tax Portal of the Secretariat General.

  1. Dividends and interest (suspended until May 5th, 2024, under the Economic Stimulus Plan – Oman Vision 2040).
  2. Royalties.
  3. Management Fees.
  4. Consideration for research & development services.
  5. Consideration for the use of or right to use computer software.
  6. Provision of services (excluding exempts).
  1. Dividends paid by a limited liability company are exempt from Withholding Tax; as profit distributions from ownership in a limited liability company are not considered as dividends of shares.
  2. Payments related to the provision of the following services: freight charges and related insurance, air ticket and accommodation costs abroad, board of directors meeting, participation in training, conferences, seminars & exhibitions, reinsurance payments, and services provided to businesses or property located outside Oman.
  3. Distributions paid by governmental authorities and banks on issued bonds and sukuk.
  4. Interest payable on bank-to-bank facilities for liquidity management purposes.
  5. Interest payable on bank deposits in Oman.

WITHHOLDING TAX IN QATAR

Non-resident and non-registered individual or company in Qatar who derives its income from an activity, carried out wholly or partially in Qatar is subject to a Withholding Tax at a rate of 5%.

The taxpayer is requested required to file the Withholding Tax return for withholding electronically to the “Dariba” platform before the 16th day of the month following the month in which the tax was withheld.

Failure to submit the Withholding Tax imposes a financial penalty equivalent to the Withholding Tax amount and a penalty of 2% of the tax per month on delays in remitting tax withheld subject to full amount of the withholding tax Withholding Tax due.

  1. Interests Interest.
  2. Royalties.
  3. Fees and other service payments.

A retention tax of 3% of the contract value or the final contractual payment (whichever is higher) applies to payments made to a temporary branch in Qatar by the Qatar government or government agency for a particular project contract.

The retention is released when the temporary branch completes its contract and submits a No Objection Letter issued by the General Tax Authority. The retention system is not applicable to resident companies in Qatar or permanent branches.

WITHHOLDING TAX IN KUWAIT

The tax law in Kuwait does not impose withholding tax, rather, it imposes a somehow a Retention System in which all public and private entities operating in Kuwait are required to retain 5% from the contract value or payment made to a service provider; until the latter submits a tax clearance certificate from the Ministry of Finance (“MoF”). All operational entities in Kuwait are obliged to inform the MoF of the companies they have contracts, agreements, or transactions with and provide a copy of the related contracts.

HOW CREATION BUSINESS CONSULTANTS CAN HELP

We assist clients in the preparation and submission of their withholding tax returns. Some of the services we offer to our clients include:

  • Monthly and annual Withholding Tax compliance.
  • Responding to queries from tax authorities.
  • Assistance in filing objections against assessments.
  • Withholding Tax health check.
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