General Guideline for Withholding Tax

Income Is it subject to Tax Withholding? Yes/No Payments arising from activities carried out in the Kingdom Yes, in respect of amounts paid to a person who does not have a permanent establishment in the Kingdom. Income arising from the sale, assignment, or disposal of immovable property No - and capital gains are subject to Income Tax Income arising from the use of immovable property Yes Income arising from the disposal of shares No - capital gains are subject to Income Tax Income arising from the use of movable property in the Kingdom Yes Income arising from the sale or licensing of the use of industrial or intellectual property in the Kingdom Yes Royalty Yes Income arising from dividends Yes Directors’ or management fees Yes Income arising from services rendered to a resident company Yes (31). Subparagraph (a), Article 5 of the Law. The following provides a brief explanation of the tax treatment in terms of Tax Withholding for each type of income: 1. Payments arising from activities carried out in the Kingdom In accordance with the provisions governing Income Tax, income shall be considered to arise from a source in the Kingdom “if it arises from an activity carried out in the Kingdom”(32). Income derived from an activity carried on in the Kingdom shall be considered income from a source in the Kingdom. An “activity” is defined as any commercial, professional, artisanal, or similar activity intended to generate profit, including the use of movable and immovable property(33). If the non-resident’s activity in the Kingdom results in the establishment of a Permanent Establishment in the Kingdom, the concept of source of income shall also include amounts paid by the Permanent Establishment (which is treated as a resident) to its Head Office (which is treated as a resident) to its Head Office (which is considered a non-resident). 2. Income arising from the disposal of immovable property In accordance with the provisions governing Income Tax, income shall be considered to arise from a source in the Kingdom “if it arises from immovable property located in the Kingdom, including gains from the disposal of an interest in such immovable property, and from the disposal of shares or stock or partnership interests in a company whose assets consist primarily - directly or indirectly - of interests in immovable property in the Kingdom”(34). Services rendered in the Kingdom and technical and consultancy services rendered by a non-resident to a resident, regardless of the place of performance Yes Income arising from the exploitation of natural resources No - such income is subject to Income Tax Income attributable to a Permanent Establishment of a non- resident No - such income is subject to Income Tax (32). First subparagraph, Subparagraph (a), Article 5 of the Law. (33). Article 1 of the Law. (34). Subparagraph 2, Subparagraph (a), Article 5 of the Law.