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July 31, 2023
2023-1340

Saudi Arabia further extends tax amnesty initiative until 31 December 2023

  • Saudi Arabia's Zakat, Tax and Customs Authority has announced the extension of its current tax amnesty initiative for another seven months, starting from 1 June 2023, until 31 December 2023.
  • The extension provides a further opportunity for taxpayers and businesses to clear their applicable tax dues and avail themselves of relevant exemptions and relief.

Executive summary

On 25 July 2023, Saudi Arabia's Zakat, Tax and Customs Authority (ZATCA) announced through its website that it is further extending the cancellation of fines and exemption of financial penalties for certain taxes, starting from 1 June 2023 through 31 December 2023. The ZATCA has also published an updated English version of the Simplified Guide — Cancellation of Fines and Exemption of Financial Penalties, which provides further elaboration on the tax amnesty program, including the exemptions available to taxpayers.

Detailed discussion

Background

In March 2020, the ZATCA announced the tax amnesty program for the first time. This amnesty program has been extended over the past three years, most recently until 31 May 2023. The extensions are intended to mitigate the economic and financial effects of the COVID-19 pandemic on establishments.

For further information on the previous Saudi tax amnesty program and relevant periods, refer to the following EY Global Tax Alerts: Saudi Arabia extends tax amnesty until 30 June 2021, dated 28 January 2021; Saudi Arabia relaunches tax amnesty initiative, dated 20 June 2022; and Saudi Arabia extends tax amnesty initiative, dated 6 December 2022.

Key elements of the extended amnesty program

The new and extended amnesty program covers the following.

  • Exemption from unpaid fines, including:
    • Fines resulting from late registration under all tax laws and regulations
    • Delayed payment fines and overdue tax return submission fines under all tax laws and regulations
    • Value-added tax (VAT) return correction penalty
    • Fines for violations of VAT field detection and e-invoicing, based on Article 45 of the VAT Law
  • Exemption from late-payment fines in the installment plan approved by the ZATCA on payments due after the end of the period of the initiative
  • Exclusions for fines paid before 1 June 2022, as well as for fines resulting from tax evasion violations, including late registration, delayed payment, return amendments and field detection

The exemption shall be subject to specific conditions, including:

  • Registration of nonregistered persons in the tax system, where registration is mandated
  • Submission to the ZATCA of all pending tax returns not previously submitted or correctly reported, and payment of the resulting tax debt principal; alternatively, applying for installments after submitting the returns

Implications

Businesses should carefully review ongoing compliance practices and assessments issued by the ZATCA and take full advantage of the applicable tax amnesty initiatives before the deadline of 31 December 2023.

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

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

Published by NTD's Tax Technical Knowledge Services group; Carolyn Wright, legal editor

 

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