KSA Tax Authority’s Amnesty

By: Support Sinnonteq

Introduction and latest tax developments in KSA

The Kingdom of Saudi Arabia introduced the latest tax developments in the country on Tax Authority’s Amnesty Scheme.

  1. Re-launch of tax penalty amnesty scheme
    Zakat, Tax and Customs Authority (ZATCA) announced the re-launch of its fines and
    relief amnesty for all taxpayers subject to most of the tax systems in KSA (apart from
    customs) for six months, starting from Wednesday, June 1, 2022, until November 30,
    2022, aimed at mitigating the economic effects on business as a result of corona
    pandemic.
  2. E-invoicing
    On May 28, 2022, ZATCA published the resolution in respect of the restrictions,
    requirements, technical specifications and procedural rules necessary to implement the
    provisions of the E-invoicing implementing regulations for the integration phase of the
    e-invoicing regime which will commence as of 1 January 2023.
  3. Dialogue with Taxpayers
    During the 2nd quarter of 2022, the ZATCA held several awareness workshops for
    foreign companies doing business in the kingdom that are subject to the applicable tax
    regulations.

An overview of tax penalty amnesty is the rules and provisions of the amnesty apply to all taxpayers registered with ZATCA or who must register as taxpayers, including those who are not residents in the kingdom. All penalties included in the amnesty are relieved from 1 June 2022 until 30 November 2022.

The following are the taxes covered by the amnesty from June 1 2022 to November 30 2022
1. Value Added Tax
2. Withholding Tax
3. Income Tax
4. Excise Tax
5. Real Estate Transaction Tax

The following are the Fines and penalties covered by amnesty from June 1 2022 to November 30 2022

  1. Registration
    Cancellation of all penalties resulting from late registration with the ZATCA under the
    relevant tax law.
  2. Tax returns
    Cancellation of all penalties resulting from late filing of tax returns, including penalties
    pertaining to VAT returns corrections.
  3. Late payments
    Cancellation of late payment penalties.
  4. Field detections
    Cancellation of field detections/inspections penalties of violation of VAT and einvoicing.
    During the amnesty period, the ZATCA will cancel penalties for violations of field
    detection/inspection of VAT and invoicing, including the following:
    1. Non-compliance with the issuance of a tax invoice, credit and debit notes.
    2. Non-compliance with adding all tax invoice elements and notices.
    3. Incorrect calculation of the tax due.
    4. Failure to keep invoices and accounting records.
    5. Preventing or hindering the ZATCA’s employees from performing their job duties

Following are the other matters included in the Tax Authority’s amnesty

  1. Previous years’ penalties
  2. Live objections and appeals with either ZATCA /GSZTCC, in which no final resolutions
    were issued before the amnesty came into force.
  3. Penalties paid through cash guarantees for formal objection purposes
  4. Penalties paid from amnesty launch date (for example, on June 1, 2022)
  5. Penalties imposed on taxpayers (VAT 5% / CIT & WHT 1%), or if an instalment plan is
    requested (provided that the instalment plan is completed before November 30, 2022)
    The following are the details of the penalties covered by the amnesty

1. Income and withholding tax violations
• For non-registration the penalty will be SR 1000 to 10,000.
• For late payments 1% of every 30 days
• For non-filing of the return 1% of the revenue, provided that it does not exceed SR.20,000,
5% of the paid tax (delay>30days), 10% of the unpaid tax (delay 30-90 days), 20% of the
unpaid tax (delay 90-365 days), 25% of the unpaid tax (delay <365 days)

2. Value-added Tax violations
• For non-registration penalty will be SR 10,000.
• Up to 50% for error in the return and voluntary disclosure
• From 5-25% for filing of a late return
• 5% for late payments

3. Real Estate Transaction Tax violations
• For the violation of provisions of the By-Law is SR 10,000 – tax due
• 5% for non-payment of tax

4. Excise tax violations
• 5-25% for non-filing of the return
• 5% for late payment

The following are the cases which are not covered by the amnesty

  • Penalties paid before effective data of amnesty
  • Penalties resulting from tax evasion violations
  • Customs cases, fraud and concealment penalties
  • Late payment penalties related to the principal tax included in the instalment plan, due to be paid after the amnesty deadline
  • Penalties based on field inspection such as non-availability of “tax seals” on “Excise goods”.

Conditions and procedures to avail of the amnesty

The following are the conditions for benefiting from the amnesty

1. Late registration
▪ Registration, along with specifying the date on which the registration was required.
▪ Filing of all returns, which must be filed from the effective date of registration.
▪ Payment of the entire principal tax due as a result of the returns filed from the
registration date

2. Delay in filing the return, disclosure and payment

▪ Filing of the unfiled returns.
▪ Payment of the entire principal tax amount due associated with the unpaid fine
resulting from the delay in filing, self-disclosure, or the ZATCA’s assessment.

3. Field control violations of VAT and E-invoicing
▪ Payment of the principal tax amount upon filing returns.

Other considerations and recommendations for the amnesty

  1.  Review the current tax position in case it is necessary to register for tax or review the previous field returns to correct any errors that require an additional tax payment.
  2. Review lives objections and appeals to verify the applicability of the amnesty while continuing to object to the tax principal amounts.
  3. Initiate internal discussion with the tax advisor to make a recommendation to higher
    management, including an execution plan of the amnesty.
  4. Studying and availing the amnesty, and considerations of options for instalment requests if there is insufficient financial liquidity.
  5. Although not part of the amnesty, the recent changes in customs duties will increase costs for businesses, hence we also suggest reviewing this area as well, especially around the origin of products.

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