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

What a Saudi service agreement is, and what local law requires A service agreement in Saudi Arabia sets out how one business provides services to another: the scope, the price, the service levels and what happens when things go wrong. A master service agreement (MSA) is the same idea at scale, with a framework contract and separate statements of work for each project, so you agree the legal terms once and add scope later. Service agreements are governed by the Saudi Civil Transactions Law, in force since 16 December 2023, which codifies the contract principles Saudi courts previously applied through Sharia based jurisprudence. A service agreement binds when the parties, the scope and the price are clear and the purpose is lawful. Key points to build around: - Language. An Arabic version governs before a Saudi court or authority. Keep a dual language text where you also need English.

• VAT. The standard VAT rate is 15 percent. State whether the price includes it and who accounts for it.
• Withholding tax. A cross border service fee to a non-resident provider can attract withholding tax, with the rate depending on the type of service and any double tax treaty. Confirm with ZATCA.
• Enforcement. Certain registered contracts can become executive instruments under the Enforcement Law, which speeds recovery. A clear, Arabic, well documented contract is easier to enforce.
• Sector rules. Regulated services (financial, telecoms, health, construction) carry their own licensing and compliance layers on top of the general law. 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 service agreement template Copy the block below and fill the bracketed fields. For a master service agreement, keep clauses 1 and 3 to 11 as the framework and move the detailed scope and price into a statement of work. ``` SERVICE AGREEMENT Made on [DATE] BETWEEN: [PROVIDER NAME], CR [no.], of [address] ("Provider") AND [CLIENT NAME], CR [no.], of [address] ("Client") 1. SERVICES The Provider will provide the services described in Schedule 1 (the "Services") to the standard set out there. 2. TERM AND RENEWAL This Agreement runs from [START] for [N], and renews for [N] unless either party gives [N] days notice not to renew. 3. SERVICE LEVELS The Provider will meet the service levels in Schedule 2. [Remedies or service credits for a missed level.] 4. FEES AND TAX The Client pays SAR [AMOUNT] [per month / per milestone], within [N] days of a valid invoice. [State whether fees include 15 percent VAT and who bears any withholding tax.] 5. CLIENT RESPONSIBILITIES The Client will provide [access, information, approvals] the Provider needs to deliver. 6. CONFIDENTIALITY AND DATA Each party keeps the other's confidential information secret. Personal data is handled in line with the Personal Data Protection Law. 7. INTELLECTUAL PROPERTY [Set out who owns pre-existing IP and who owns deliverables; licence terms for anything the Provider retains.] 8. WARRANTIES AND LIABILITY The Provider performs with reasonable skill and care. Liability is capped at [cap], excluding [indirect loss], except where the law does not allow a cap. 9. SUSPENSION AND TERMINATION Either party may end this Agreement on [N] days notice, or immediately for material breach that is not cured in [N] days or for insolvency. 10. FORCE MAJEURE Neither party is liable for a failure caused by an event beyond its reasonable control. 11. GOVERNING LAW AND DISPUTES This Agreement is governed by the laws of the Kingdom of Saudi Arabia, and disputes go to [the competent court / arbitration under the Saudi Center for Commercial Arbitration]. Signed: Provider: __________ Client: __________

- **Fees and tax (clause 4).** State the price, the currency, whether 15 percent VAT is included, and who bears any withholding tax on a cross border fee. Vague tax terms cause disputes at invoice time.
- **IP (clause 7).** Separate the provider's pre-existing tools from the deliverables built for the client, and say who owns and who licenses each.
- **Liability (clause 8).** A cap tied to the fees, with indirect loss excluded, is standard. Note that some losses cannot be capped under the law.
- **Disputes (clause 11).** Choose court or arbitration deliberately. Arbitration under the Saudi Center for Commercial Arbitration is common for larger commercial contracts. ## Red flags to check before you sign - A scope or service level schedule left blank or vague, so there is nothing to measure against.
- No clarity on VAT and withholding tax, leaving the net price uncertain.
- An uncapped liability clause, or a one sided cap.
- IP terms that do not separate the provider's tools from the client's deliverables.
- No cure period before termination for breach.
- An English only contract where an Arabic version is needed for enforcement. ## Service levels and remedies that actually bite A service level that no one can measure is decoration. For each level, state the metric, how it is measured, over what period, and the remedy if it is missed. A service credit, a set reduction in the fee when a level is missed, is the usual remedy because it is automatic and avoids a fight over loss. Keep the credit meaningful but proportionate, and set a floor below which the client can treat repeated failures as a material breach and end the agreement. Match the service levels to what the client actually needs. An uptime figure matters for a hosted system; a response and resolution time matters for support; an accuracy or error rate matters for a processing service. Define business hours and the clock that applies, because a resolution time measured in calendar hours is very different from one measured in business hours. Finally, record who reports on performance and how disputes over the numbers are resolved, so the measurement itself does not become the argument. ## A note on jurisdiction and Adira's coverage Saudi tax and sector rules change, so confirm the current position with ZATCA or local counsel before relying 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 service agreement. The ongoing work is keeping the legal terms consistent across every client while scope and price change per project, tracking renewal and notice dates, and holding each statement of work and signed version in one place. When drafting, review and tracking live in one AI workspace tuned to how your company contracts, the service levels, fees and renewal dates stay visible 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.