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A non-resident company concluded a less-than-three-month contract with one of the resident companies operating in equipment supply sector -in conjunction with the supply work, services specific value has been provided inside Saudi Arabia. Is the contract concluded by the non-resident company considered in this case a permanent establishment?

If the value of the accompanying business is not defined?      Since the term of implementing the supply contract is less than three months, the non-resident company that concluded such contract does not have a permanent establishment in Saudi Arabia to conduct its business activities wholly or partially and does not have a licensed agent in the Kingdom, this company is not considered a permanent establishment in Saudi Arabia. The amount paid to such establishment in return is subject to Withholding Tax as stipulated in the provisions of Article (68) of Income Tax Law and (63) of the Implementing Regulation. This does not require an estimation of the value of accompanying business as long as the value is detailed in the contract. However, if the value of the services is not identified, each accompanying business will be estimated by 10% of the total contract value. Moreover, the service will be subject to Withholding Tax, provided that it will be identified according to the type of service accompanying the supply. ​