Pending approval from the Saudi Arabian authorities, the treaty will be effective from the calendar year following the one during which such approval takes place.
The DTT covers personal income tax and profit tax in FYR Macedonia and zakat tax and income tax in Saudi Arabia. Certain treaty specifics are discussed below.
According to the DTT, construction sites including assembly or installation projects and supervisory activities thereof, whose duration exceeds 183 days in a year are considered a permanent establishment. The same principle applies to the provision of services (including consulting) in aggregate duration in excess of 183 days within a twelve month period.
The treaty with the Kingdom of Saudi Arabia does not deviate significantly from the standard when it comes to withholding tax rates, at least from the FYR Macedonian perspective. Dividends are taxed at 5%. A standard 10% withholding tax rate is applicable on royalties.
As far as exclusion of double taxation is concerned, the treaty defines that both countries will allow deduction from taxes in the amount of tax paid in the other state.