Saudi Arabia: Exemption from fines and financial penalties initiative
02 June, 2022
In brief
The Zakat, Tax and Customs Authority (‘ZATCA’) has re-launched an initiative to exempt or abolish fines and financial penalties imposed on taxpayers on account of lapse in fulfilling several procedural aspects related to taxes applicable in the Kingdom of Saudi Arabia.
The types of taxes included in this initiative are Excise Tax, Value Added Tax (including E-Invoicing), Real Estate Transaction Tax, Withholding Tax and Corporate Income tax. The exemption will remain applicable for a 6-month period starting from 1 June 2022 till 30 November 2022.
The announcement is issued in Arabic and can be accessed here
In detail
In line with several initiatives adopted earlier by the Saudi government and ZATCA to mitigate the economic impact of the COVID-19 pandemic on taxpayers, ZATCA has reintroduced a 6-month window allowing taxpayers an exemption from the imposition of fines and penalties levied on account of the following:
Late registration
Late payment
Late submission of the declaration
Correcting the declaration for VAT
Field control related to the application of E Invoicing provisions
Other general provisions related to VAT
ZATCA clarified that in order to benefit from the current initiative, taxpayers will be required to:
Discharge their prescribed obligations as per the respective tax legislation
Pay all outstanding tax dues
Taxpayers can also submit a request to ZATCA for allowing payment of taxes due on an installment basis, provided that the application is submitted and approved by ZATCA within the validity of this initiative.
A simplified guide has been issued by ZATCA explaining the types of issues and fines/penalties that will be covered under the current initiative with illustrative examples which can be accessed here
The current initiative does not include fines related to:
Tax evasion
Fines that were paid before the effective date of this initiative
Late payment fines related to the origin of the tax included in an installment plan that must be paid after the end of the specified period for the initiative scheduled on 30 November 2022
It is yet to be clarified whether taxpayers can pay the principle disputed tax amount to avail the amnesty benefits while keeping the dispute ongoing, similar to the previous amnesty initiative granted by ZATCA during 2020.
The Takeaway
Taxpayers are recommended to assess their status of compliance with relevant tax legislations and avail benefits under the current initiative in case of any non-fulfillment of prescribed tax obligations within the amnesty period.
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