Accounting glossary term
Double Taxation Agreements
Double taxation agreements (DTAs) are bilateral treaties that prevent the same income from being taxed in two countries. They allocate taxing rights and provide relief through credits or exemptions.
What is Double Taxation Agreements?
Double taxation agreements (DTAs) are bilateral treaties that prevent the same income from being taxed in two countries. They allocate taxing rights and provide relief through credits or exemptions.
How It Works
- Determine residency of the taxpayer.
- Identify which country has taxing rights under the treaty.
- Claim relief via credit, exemption, or reduced withholding rates.
Saudi Context
Saudi Arabia has DTAs with more than 50 countries, administered by ZATCA. They reduce withholding tax on dividends, interest, royalties, and technical service fees paid to treaty residents.
Example
A UK contractor providing technical services to a Saudi client benefits from a reduced 5% withholding tax (instead of 15%) under the Saudi-UK DTA.