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May 15, 2026

This Circular clarifies the application of withholding tax on payments by resident entities to non-resident telecommunication companies, pursuant to Article 68 of the KSA Income Tax Law. It confirms that payments for international phone/telex services, use of satellite bandwidth, and leasing capacities in international cables are subject to a 5% withholding tax as they are considered sourced within the Kingdom. However, it explicitly exempts payments for international roaming services. The exemption is based on the determination that the service is wholly performed outside Saudi Arabia, with the local provider acting merely as a billing intermediary.

This is not an Official Translation:

CIRCULAR NO. 3256/9 DATED 28/06/1426H
(03/08/2005)

RE: WITHHOLDING TAX ON CERTAIN TELECOMMUNICATION SERVICES

AS OF 18 FEB 2021

Circular No. 3256/9 dated 28/06/1426H (03/08/2005) that refers to Article 68(a) of the Income Tax Law and which states in subparagraph (a)(5) that the withholding tax rate for payments made against international telecommunication services is 5%, and that also refers to Article 63(5) of the implementing regulations to the income tax law.

An inquiry was received about whether tax should be withheld from the following payments made by residents to international [nonresident] telecommunications companies and payments to other nonresidents:

Payments made in respect of international phone services, telex, and intermediary services. Such services arise from a local telecommunication company's use of an international telecommunication company's network to connect, transmit or deliver calls made by a KSA resident subscriber when placing a requesting to make an international call.
Payments made to international organizations that own satellites against the use of satellite bandwidth or international circuits in such satellites for the purpose of providing the local telecommunication company subscribers with international telecommunication services.
Payments made to nonresident companies in respect of leasing capacities in international ca-bles and internet for the purpose of using such capacities in various communication services.
Payments made to international telecommunication companies against international roaming services - a service arising from the use of a foreign phone network when a subscriber of a Saudi telecom service provider uses a Saudi-issued mobile sim when abroad for the duration of their stay outside of the Kingdom.