The short answer
The United States usually taxes royalties earned there by non-US persons by withholding a share before payment, usually thirty percent. A tax treaty between your country and the United States can lower it, claimed through a W-8BEN form. Gulf countries usually have no such treaty, so the full rate usually applies, but to US-source income only.
What is being withheld, and on what
Withholding is tax taken at source. When a US company pays royalties to someone outside the United States, US law usually requires it to keep back a share and send it to the US tax authority, the IRS, on the recipient's behalf. Streaming and download royalties are treated as royalties for this purpose, so the rule reaches music income.
Only US-source income is affected: streams, downloads and advertising matched to listeners in the United States. Income from listeners elsewhere is outside the US rule, though other countries have their own rules and this varies by country. For an artist whose audience is mostly in the Arab world, the US-source share of income is often modest, and so is the withheld amount.
The W-8BEN form
Form W-8BEN is the IRS form on which an individual outside the United States certifies that they are not a US person and, where a treaty exists, claims the treaty rate. Companies use the W-8BEN-E version. The form is given to the payer, not sent to the IRS, and usually stays valid until the end of the third calendar year after it was signed, unless your circumstances change.
The form asks for your legal name, country of residence, address, and usually a home-country tax identification number or a reason you have none. Without a valid form on file, the payer usually withholds at the full statutory rate. Fill it in truthfully; it is a signed declaration.
Treaty countries and non-treaty countries
The United States has income tax treaties with several dozen countries. Most reduce the withholding rate on royalties, some to a small percentage and some to nothing, in exchange for the income being taxed at home. Many European and Asian countries are covered, and in the Arab world Egypt, Morocco and Tunisia usually have treaties with reduced royalty rates.
Kuwait, Saudi Arabia, the United Arab Emirates, Qatar, Bahrain and Oman usually have no income tax treaty with the United States. An artist resident there still submits a W-8BEN to certify non-US status, but cannot claim a reduced rate, so the full statutory rate usually applies to the US-source part of their royalties. Treaty lists change, so check the current position.
Where in the chain the tax is taken
Who withholds depends on who the US payer is. If your distributor is a US company, it usually withholds when paying you, based on the W-8BEN you gave it. If your distributor is outside the United States, the US stores may withhold from the distributor's US-source receipts, based on the distributor's own form and its country's treaty, and the effect reaches you through your statement.
Ask your distributor which case applies and where the deduction appears in your statement. Each year the withholding agent usually issues a Form 1042-S showing the gross amount, the rate and the tax withheld. Keep it. In countries with a personal income tax it is often used to claim a credit; in Gulf countries, which usually have none, there is usually no credit to claim and the withheld amount is a final cost.
What a Gulf artist can usually expect
In practice: submit a W-8BEN when your distributor or store asks, expect no treaty reduction, and expect withholding on the US-source part of your income only. Your statement should separate US income from the rest, so you can see what the deduction applies to. If it seems to apply to all income rather than the US share, ask for an explanation.
None of this is legal or tax advice. Rules change, forms are updated, and your own situation, such as dual residence or a company registered elsewhere, can change the answer. For anything beyond the basics, speak to a tax adviser who knows cross-border royalties.
- Submit W-8BEN (individuals) or W-8BEN-E (companies) when asked; renew it before it expires.
- Expect withholding on US-source royalties only, usually at the full statutory rate in non-treaty countries.
- Keep each year's Form 1042-S with your statements.
Questions people ask
Can I avoid US withholding by using a company?
Usually not on its own. A company in a non-treaty country files a W-8BEN-E and faces the same statutory rate. Only residence in a treaty country, properly documented, usually changes the rate.
Does withholding apply to my income from Arab or European listeners?
Usually no. US withholding applies to US-source income only. Other countries may have their own withholding rules on royalties, and this varies by country, but the US rule stops at the US share.
My distributor never asked for a W-8BEN. Is something wrong?
Not necessarily. If the distributor is outside the United States, the US stores may document the distributor instead of each artist. Ask how US withholding is handled and where it appears in your statement.