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June 21, 2022
2022-0963

Saudi Arabia relaunches tax amnesty initiative

Executive summary

On 1 June 2022, Saudi Arabia's Zakat, Tax and Customs Authority (ZATCA or the Authority) announced through its portal the relaunch of the ZATCA's initiative to cancel fines and financial penalties for certain taxes from 1 June 2022 to 30 November 2022. The amnesty was relaunched to reduce the economic effects of the COVID-19 pandemic on businesses in Saudi Arabia.

Detailed discussion

In March 2020, Saudi Arabia first introduced economic relief initiatives to alleviate the economic impact of COVID-19 for businesses in the country. The initiatives included a tax amnesty program to provide relief to taxpayers from fines relating to tax returns, subject to certain conditions. The relief initially covered the period from 18 March to 30 June 2020 and was extended twice until 30 September 2020 and until 30 June 2021.

On 1 June 2022, the ZATCA announced the relaunch of the tax amnesty program and also issued the English version of the Simplified Guidelines.

Based on the Simplified Guidelines, highlights of the 2022 tax amnesty initiative include:

Duration

The tax amnesty covers the period from 1 June 2022 to 30 November 2022.

Coverage

The amnesty initiative applies to the following taxes:

  • Value-added tax (VAT)
  • Withholding tax (WHT)
  • Excise tax
  • Income tax
  • Real estate transaction tax (RETT)

Types of fines covered

Exemption from unpaid fines, including:

  • Fines resulting from late registration in all Tax systems or Tax laws
  • Payment delay fines and delay in filing a tax return in all tax systems
  • Fines resulting from correcting a VAT return
  • Fines resulting from field detection of violations of VAT and e-invoicing

Fines excluded

The amnesty initiative excludes the following:

  • Fines paid before the effective date of this initiative
  • Fines resulting from tax evasion violations
  • Fines for late payment associated with the tax principal included in an installment plan, which becomes payable after the expiration of the amnesty period on 30 November 2022

To take benefit of the initiatives, certain conditions are required to be met such as full payment of the principal tax due and filing of any unfiled returns, among others.

Implications

Businesses should carefully review their ongoing compliance practices and any assessments issued by the ZATCA and evaluate whether the amnesty may benefit them.

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For additional information with respect to this alert, please contact the following:

EY Consulting LLC, Dubai

Ernst & Young Professional Services, Riyadh

Ernst & Young Professional Services, Al Khobar

Ernst & Young LLP (United States), Middle East Tax Desk, New York

 

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