Executive summary

On 29 December 2024, Saudi Arabia's Zakat, Tax and Customs Authority (ZATCA) announced the Minister of Finance's decision to extend the Cancellation of Fines and Exemption of Financial Penalties Initiative for taxpayers subject to all tax laws for six months until 30 June 2025.

The initiative, previously extended from 1 January 2024 through 30 June 2024, and until 31 December 2024, has been further extended for another six months to continue to provide relief to taxpayers and businesses who meet the qualifying requirements. The ZATCA has published a Simplified Guide — Cancellation of Fines and Exemption of Financial Penalties to help taxpayers understand the details of the initiative.

Detailed discussion

Background

In March 2020, the ZATCA had introduced the tax amnesty initiative to alleviate the economic impact of the COVID-19 pandemic for businesses in the country. The purpose of the initiative was to provide relief to taxpayers from fines relating to tax returns, subject to certain conditions. This initiative has since been extended multiple times, with the latest extension being from 1 July 2024 to 31 December 2024.

For further information on the previous Saudi tax amnesty program, please refer to EY Global Tax Alert, Saudi Arabia further extends tax amnesty initiative until 31 December 2024, dated 8 July 2024.

Highlights of the tax amnesty extension

Exemption from unpaid fines is provided in the following cases:

• 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 is also provided from late-payment fines in the ZATCA-approved installment plan for payments due after the end of the amnesty initiative.

Eligibility for exemption

To be eligible for exemption, taxpayers should fulfill certain conditions, including registering with the ZATCA, filing pending or incorrect tax returns and paying the resulting principal amount or applying for installments after filing.

The taxpayer shall be exempt from late filing fines relating to a return that was due to be filed to ZATCA before the effective date of the extension, i.e., 1 January 2025.

Taxpayers shall not be exempted from fines resulting from tax evasion violations.

Implications

The further extension of the amnesty initiative until 30 June 2025 provides another opportunity for businesses and taxpayers to rectify any discrepancies or errors in their tax records and avoid late-payment fines.