Consultancy agreement in Saudi Arabia: Template, Key Clauses and Local Law (2026)

What a Saudi consultancy agreement is, and what local law requires A consultancy agreement in Saudi Arabia engages an independent consultant, a person or a firm, to deliver advice or a defined piece of work in return for a fee. It is not an employment contract, and that difference matters. Employment is governed by the Saudi Labor Law and brings GOSI, end of service and other duties. A genuine consultancy sits outside that, under the general law of contract. Since 16 December 2023, Saudi Arabia has had a codified Civil Transactions Law, which sets out the principles of contract that courts previously applied through Sharia based jurisprudence. A consultancy agreement is a commercial or civil contract under that law, and it binds when the parties, the scope and the fee are clear and the purpose is lawful. Key points to build around: - Classification. If the engagement looks like employment in substance (fixed hours, close control, integration into the team, a single long term client), the authorities or a court may treat it as employment, with the duties that brings. Keep a consultant genuinely independent.

• Language. For use before a Saudi court or authority, an Arabic version governs. Keep a dual language text if you need English too.
• Withholding tax. Payments to a non-resident consultant for technical or consulting services are generally subject to withholding tax, commonly cited at 5 percent, with higher rates where the payment is treated as a royalty or a management fee. A double tax treaty can change the rate. Confirm the current rate with ZATCA or a tax adviser.
• VAT. The standard VAT rate is 15 percent. Whether it applies depends on where the service is used and the status of the parties, so state clearly who bears VAT.
• Saudization and licensing. A foreign consultant providing services in the Kingdom should check whether the activity needs a licence or local presence. This is general guidance, not legal advice. Confirm the current position with a Saudi lawyer or ZATCA before you rely on any clause. Last verified October 2026. ## Saudi consultancy agreement template Copy the block below and fill the bracketed fields. ``` CONSULTANCY AGREEMENT Made on [DATE] BETWEEN: [CLIENT NAME], CR [no.], of [address] ("Client") AND [CONSULTANT NAME], [CR / national ID / Iqama], of [address] ("Consultant") 1. SERVICES The Consultant will provide [describe the services and deliverables] as set out in Schedule 1. 2. INDEPENDENT STATUS The Consultant is an independent contractor, not an employee. The Consultant controls how the work is done, carries its own costs, and is not entitled to employee benefits or GOSI coverage from the Client. 3. TERM This Agreement runs from [START] until [END or completion of the Services], unless ended earlier under clause 9. 4. FEES AND TAX The Client pays SAR [AMOUNT] [per deliverable / per month / fixed], within [N] days of a valid invoice. [State whether fees include VAT at 15 percent and who bears any withholding tax.] 5. EXPENSES The Client reimburses pre-approved expenses against receipts. 6. CONFIDENTIALITY The Consultant keeps the Client's confidential information secret during and after the term and uses it only for the Services. 7. INTELLECTUAL PROPERTY Work product created under this Agreement belongs to the Client on payment, and the Consultant assigns those rights to the Client. 8. LIABILITY The Consultant performs with reasonable skill and care. [Liability cap and carve-outs.] 9. TERMINATION Either party may end this Agreement on [N] days written notice, or immediately for material breach. Fees for work done up to the end date remain payable. 10. GOVERNING LAW This Agreement is governed by the laws of the Kingdom of Saudi Arabia, including the Civil Transactions Law. Signed: Client: __________ Consultant: __________

- **Independent status (clause 2).** This clause is only as strong as the reality. If the consultant works set hours under close direction, a label does not save it. Keep control, tools and risk on the consultant's side.
- **Fees and tax (clause 4).** State the fee, the currency, and clearly whether 15 percent VAT is included and who absorbs any withholding tax on a cross border payment. Silence here causes real friction at invoice time.
- **IP (clause 7).** Assign ownership of work product to the client on payment, so the client can use what it paid for without a later argument.
- **Termination (clause 9).** Give a clean notice right and a payment rule for work done, so an early exit does not become a fight over money. ## Red flags to check before you sign - An independent status clause that the day to day reality contradicts, which risks a finding of employment.
- No clarity on VAT and withholding tax, leaving the net fee uncertain.
- A scope with no deliverables, dates or acceptance test.
- No IP assignment, so the client does not own what it paid for.
- A liability clause with no cap, or one that makes the consultant carry risk out of proportion to the fee.
- An English only contract where an Arabic version is needed for enforcement. ## Keeping the consultant genuinely independent Because a finding of employment brings GOSI, end of service and other duties, the independent status clause only helps if the facts match it. Build the engagement so the reality supports the label. Let the consultant decide how and when to do the work, rather than setting fixed office hours. Pay against deliverables or invoices, not a fixed monthly salary dressed up as a fee. Let the consultant use their own tools and carry their own costs and risk. Do not give the consultant a company email, a title on the org chart or line-managed staff, which all point to employment. A genuine consultant can usually work for other clients, and the contract should allow that, subject only to confidentiality and conflict rules. Where the work is long and continuous for a single client, the risk of reclassification rises, so review the arrangement periodically. If the relationship has in truth become employment, the safer path is to convert it to an employment contract rather than hope the label holds. ## A note on jurisdiction and Adira's coverage Saudi tax and classification rules shift, so confirm the current position with ZATCA or local counsel before you rely on a figure. Adira is India first in its depth today and uses an international setting for other jurisdictions. Deep, verified Saudi coverage, including Arabic language drafting, is on Adira's roadmap rather than established today, so treat any Saudi specific output as a draft to check locally. ## Where a contract workspace helps A template gets you a sound consultancy agreement. The ongoing work is keeping scope, fee and tax terms consistent across every consultant, tracking renewal and notice dates, and holding each signed version and its deliverables in one place. When drafting, review and tracking live in one AI workspace tuned to how your company engages consultants, the scope, fees and VAT position stay clear across every engagement, with edits made in plain language. [Adira](https://adiralaw.com) is one workspace built to work this way, with Saudi depth on its roadmap. This template alone is enough to put a fair agreement in place today.