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December 6, 2022
2022-1802

Saudi Arabia extends tax amnesty initiative

  • Saudi Arabia's Zakat, Tax and Customs Authority has announced the extension of the current tax amnesty initiative for another six months until 31 May 2023.
  • The tax amnesty covers waiver of outstanding financial penalties relating to tax returns, prior to the extension date of the initiative.

Executive summary

On 30 November 2022, Saudi Arabia's Zakat, Tax and Customs Authority (ZATCA or the Authority) announced through its portal, the extension of its initiative to cancel fines and financial penalties for certain taxes from 1 December 2022 to 31 May 2023. The amnesty was extended 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.

Further, on 1 June 2022, the ZATCA announced the relaunch of the tax amnesty program, which has now been extended for an additional six months, i.e., until 31 May 2023. The ZATCA has also issued an updated version of the Simplified Guideline, explaining the benefit of the extended tax amnesty initiative.

The key points of the extended tax amnesty initiative are as follows:

Duration

The extended tax amnesty covers the period from 1 December 2022 to 31 May 2023.

Coverage

The amnesty initiative applies to fines and penalties relating to the following taxes:

  • Value-added tax
  • Withholding tax
  • Excise tax
  • Corporate income tax
  • Real estate transaction tax

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 tax return
  • Fines resulting from field detection of violations of tax and e-invoicing

Fines excluded

The amnesty initiative excludes the following:

  • Fines paid before the effective date of the 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 31 May 2023

To avail of the benefit of the initiatives, taxpayers need to meet certain conditions, 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 (Professional LLC), Riyadh

Ernst & Young Professional Services (Professional LLC), Jeddah

Ernst & Young Professional Services (Professional LLC), Al Khobar

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

 

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