United States and Saudi Arabia sign Tax Information Exchange Agreement

On April 14, 2026, the Government of the United States of America (US) and the Government of the Kingdom of Saudi Arabia (KSA) signed a Tax Information Exchange Agreement (TIEA). The TIEA establishes a formal framework for cooperation between the two countries through the exchange of information that is foreseeably relevant to the administration and enforcement of their respective domestic tax laws. For taxpayers, the agreement aims to increase transparency and expand enforcement capability rather than substantively change tax law.

The TIEA has distinguishable differences from an income tax treaty. It does not allocate taxing rights, reduce withholding tax rates, provide relief from double taxation, or create treaty-based filing or registration obligations. Rather, it is an information exchange and enforcement instrument that gives the competent authorities tools to obtain and share information relevant to covered tax matters.

The TIEA permits the exchange of information upon request. It also contemplates (i) automatic exchange for categories of cases and procedures agreed by mutual agreement and (ii) spontaneous exchange under procedures determined by the competent authorities.

 

Competent authorities and covered taxes

The agreement identifies the competent authorities as (i) the Secretary of the Treasury or delegates in the US and (ii) the Ministry of Finance, represented by the Minister of Finance or authorized representatives, in KSA.

The TIEA covers a broad range of taxes. For the US, these include federal taxes on income, federal taxes related to employment and self-employment, federal estate and gift taxes, federal excise taxes, and any other federal tax imposed after the date of signature in addition to, or in place of, those taxes. For Saudi Arabia, these include income tax, zakat, value-added tax (VAT), excise tax, and any identical or substantially similar taxes imposed after the date of signature in addition to, or in place of, those taxes.¹ Customs duties are excluded. The competent authorities are also required to notify one another of significant changes in taxation laws or other laws that relate to the application of the TIEA.

 

Foreseeable relevance and request standards

The exchange of information is governed by the “foreseeable relevance” standard. Information may be exchanged if it is foreseeably relevant to the administration and enforcement of the domestic tax laws of the requesting state concerning covered taxes, including the determination, assessment, and collection of tax, recovery and enforcement of tax claims, and the investigation or prosecution of tax matters.

The standard supports facilitation of effective information exchange while discouraging unfocused enquiries or fishing expeditions. To that end, the TIEA states that a request for information must be made with the greatest degree of specificity possible and should include, among other things:

• the identity of the person, or ascertainable group or category of persons, under examination or investigation;
• a statement of the information sought, the requested form of production, and the period to which the request relates;
• the tax purpose for which the information is sought and grounds for believing the information is foreseeably relevant;
• grounds for believing that the information is held in the requested state or is in the possession or control of a person within that state, and, to the extent known, the name and address of the person believed to hold the information; and
• statements that the request conforms to the applicant state’s laws and administrative practice and that the applicant state has pursued available domestic means to obtain the information, except those that would give rise to disproportionate difficulties.

However, the standard does not require the requesting authority to prove that the information will ultimately affect a tax outcome. The TIEA also provides that information must be exchanged without regard to whether the requested state needs the information for its own tax purposes or whether the conduct being investigated would constitute a crime under the laws of the requested state.

 

Information-gathering powers

A feature of the TIEA is the expectation that each contracting state will maintain and deploy effective domestic information-gathering powers. If the information already in the possession of the requested competent authority is not sufficient, the requested state must use all relevant information-gathering measures to obtain and provide the requested information, even if it does not need that information for its own tax purposes.

The agreement specifically requires each competent authority to be able to obtain and provide, upon request, information held by banks and other financial institutions; information held by persons acting in an agency or fiduciary capacity, including nominees and trustees; and ownership information for companies, partnerships, trusts, foundations, and other persons, including ownership-chain information within the constraints of the TIEA. In the case of trusts, this includes information on settlors, trustees, and beneficiaries; in the case of foundations, it includes information on founders, foundation council members, and beneficiaries. Publicly traded companies and public collective investment funds or schemes are subject to a limited exception where obtaining the information would give rise to disproportionate difficulties.

Where specifically requested and to the extent allowable under domestic law, the requested authority may also secure depositions of witnesses, original and unedited books and records or certified copies, statements regarding the authenticity and maintenance of records, and certifications as to whether requested procedures were followed.

The obligation is not unlimited. A requested state is not required to provide information that is neither held by its authorities nor in the possession or control of persons within its territorial jurisdiction.

 

Limitations and safeguards

The TIEA imposes a number of limitations and safeguards that qualify the obligation to exchange information. These include:

• information that the applicant state would not be able to obtain under its own laws for purposes of administering or enforcing its own tax laws, or requests that are not made in conformity with the TIEA;
• confidential communications between a client and an attorney, solicitor, or other admitted legal representative, where produced for the purposes of seeking or providing legal advice or for use in existing or contemplated legal proceedings;
• information that would disclose trade, business, industrial, commercial, or professional secrets or trade processes, subject to the important caveat that bank, financial institution, fiduciary, and ownership information covered by the TIEA is not treated as such a secret or trade process merely because it falls within those categories; and
• information where disclosure would be contrary to public policy (ordre public).

The agreement also provides that a request may not be declined merely because the underlying tax claim is disputed or because the statute of limitations for assessment, collection, or prosecution has expired under the domestic law of the requested state. Instead, the applicant state’s statute of limitations governs the request for information.

 

Confidentiality

Information received under the TIEA must be treated as secret in the same manner as information obtained under the receiving state’s domestic laws. It may be disclosed only to persons or authorities, including courts and administrative bodies, involved in assessment, collection, administration, enforcement, prosecution, appeals, or oversight in relation to covered taxes, and it may be used only for those purposes. The information may be disclosed in public court proceedings or judicial decisions.

The TIEA contains limited exceptions. With the prior written consent of the competent authority that provided the information, information may be disclosed for certain counter-terrorism purposes, purposes permitted under an international agreement governing legal assistance in criminal matters that allows for the exchange of tax information, or other purposes permitted under the domestic laws of both states. Information that does not relate to a particular person may also be disclosed after consultation if the competent authorities determine that disclosure would not impair tax administration.

 

Mutual administrative assistance and implementation

In addition to taxpayer-specific exchanges, the TIEA contemplates broader administrative cooperation. The competent authorities may resolve implementation or interpretation issues by mutual agreement, agree procedures to facilitate implementation, and communicate directly for those purposes. They may also exchange technical know-how, develop new audit techniques, identify new areas of non-compliance, and jointly study non-compliance areas.

Unless the competent authorities agree otherwise, ordinary costs incurred in providing assistance are borne by the requested state and extraordinary costs are borne by the applicant state.

 

Entry into force and temporal application

The TIEA has been signed but will enter into force one month from the date on which the US receives KSA’s written notification through diplomatic channels that the Kingdom has completed its necessary internal procedures for entry into force.

Once in force, the provisions will have effect for requests for information made on or after the date of entry into force with respect to taxable periods beginning on or after January 1 of the third year preceding the date of entry into force. Where there is no taxable period, the agreement applies to charges to tax arising on or after that same date. Accordingly, if the TIEA enters into force during 2026, requests could cover taxable periods beginning on or after January 1, 2023. This potential temporal reach should be considered when advising on historical Saudi-US structures and transactions.

 

Practical implications

For businesses and individuals with operations, investments, financing arrangements, owners, bank relationships, or other intermediaries in both countries, the TIEA increases the ability of tax authorities to obtain cross-border information relevant to audits and enforcement. The agreement is particularly relevant where information is held by financial institutions, trustees, nominees, fiduciaries, or entities in an ownership chain.

Taxpayers are encouraged to consider whether documentation supporting tax residence, beneficial ownership, intercompany arrangements, financing, withholding tax, VAT, excise tax, income tax, and zakat positions is complete, consistent, and readily supportable across both jurisdictions. Businesses may also revisit internal protocols for responding to authority requests, preserving privilege, and coordinating between Saudi and US advisers.

 

Conclusion

The US-KSA TIEA can be understood as a transparency and enforcement tool. It does not itself impose new taxes or provide treaty benefits, but it addresses information asymmetries between the two jurisdictions. Taxpayers with American–Saudi Arabian structures or transactions may wish to assess whether their positions and supporting records are prepared for any resulting increased cross-border scrutiny.

 

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¹Zakat is a statutory levy administered as part of Saudi Arabia’s fiscal system alongside income tax. For businesses, it generally applies to entities with Gulf Cooperation Council (GCC) ownership, including the GCC-owned portion of mixed-ownership entities, and is calculated by reference to a zakat base that broadly reflects adjusted net worth rather than only income or accounting profits.