The fee is believed to be the largest ever offered to Tiger to participate in an official overseas event.
It is unknown why Woods turned down the invite, but he is expected to play at Torrey Pines in California the week before the Saudi Arabia event in late January.
Other than the 2018 Open Championship, Woods' last overseas tournament was the 2017 Dubai Desert Classic. He withdrew from the event and underwent his fourth back surgery a few months later.
European Tour CEO Keith Pelley defended his decision to host an event in Saudi Arabia last week.
"I'll be very, very clear," Pelley said, according to Dan Kilbridge of Golfweek. "Saudi International is on our schedule and we'll continue to monitor just like we would do with every other country."
"We have heard some of the criticism of the region. Obviously freedom of speech is far more available now based on social media. We've listened and we will continue to monitor the situation."