Zatca Recent Updates

ZATCA, the tax authority in Saudi Arabia, has recently announced several initiatives aimed at promoting compliance and providing relief to taxpayers. These include the second wave of targeted groups under phase 2 of e-invoicing, which requires businesses in KSA with an annual turnover of over SAR 500 million but less than SAR 3 billion to integrate their ERP/POS systems with ZATCA's Fatoora portal from 1st July 2023. ZATCA has also extended its tax amnesty initiative, the 'Cancellation of Fines and Exemption of Penalties Initiative,' from 1st December 2022 to 31st May 2023, to provide relief to taxpayers who have been penalized for various tax violations. Additionally, ZATCA has revised the penalty structure for VAT and e-invoicing fines in KSA to promote compliance and increase awareness among taxpayers about the consequences of misconduct.

On 23rd December 2022

ZATCA released an announcement stating that businesses in KSA with an annual turnover of over SAR 500 million but less than SAR 3 billion are included in the second wave of targeted groups under phase 2 of e-invoicing. These businesses are required to integrate their ERP/POS systems with ZATCA's Fatoora portal from 1st July 2023.

For further details on this matter, please visit the ZATCA portal.

Cancellation of Fines and Exemption of Penalties Initiative: Saudi Arabia's Tax Amnesty Program

On 30th November 2022

ZATCA, the tax authority in Saudi Arabia, has recently announced the extension of its tax amnesty initiative from 1st December 2022 to 31st May 2023. The initiative called the ‘Cancellation of Fines and Exemption of Penalties Initiative,’ aims to provide relief to taxpayers who have been penalized for various tax violations. The initiative covers a range of penalties.

• Late registration under all tax laws
• Late tax payment
• Late filing of returns in all tax systems
• Correcting VAT returns
• Violation of VAT field control related to applying the e-invoicing regulations and other general regulations.

The initiative is expected to benefit many taxpayers in Saudi Arabia who has faced financial burdens due to tax penalties in the past.

On January 30th, 2022

ZATCA Aims to Promote Compliance through Revised Penalties for VAT and E-invoicing Fines in KSA

ZATCA announced the re-launch of their amnesty program which seeks to waive fines that were imposed under several tax laws. This includes violations of VAT and e-invoicing detected during field operations. The initiative is effective from June 1st, 2022 until November 30th, 2022. Further details can be found in ZATCA's Simplified Guide on Exemption of Penalties Initiative.

ZATCA has recently revised the penalty structure for VAT and e-invoicing fines in KSA, with the changes taking effect on January 30th, 2022. The reclassification decision aims to promote compliance with the relevant laws and regulations and allow taxpayers an opportunity to meet the requirements.

Here are the key highlights of ZATCA's recent reclassification decision regarding penalties for tax violations:

• If a ZATCA official detects a violation during an inspection, the taxpayer will receive a notice and a warning not to repeat the violation.
• The taxpayer will have a three-month grace period to rectify the violations (with a few exceptions).
• If the taxpayer continues to violate the regulations, the new penalty structure will come into effect.
• ZATCA has clarified that if the same violation occurs again within 12 months, it will be considered a new act of misconduct, and the penalty cycle will start with a warning notice.

The latest reclassification decision only covers violations that are committed on the field and observed by ZATCA officials:

The decision does not cover non-field violations, which include:

• Failure to file declarations
• Tax evasion
• Failure to pay due tax
• Manipulation in the tax return
• Late payment of due tax
• Late filing of tax returns

The authority reclassified the penalties for certain violations to increase awareness among taxpayers about the consequences of the act of misconduct. The aim is also to encourage them to comply with each requirement of the KSA VAT law.

conclusion:

In conclusion, ZATCA has been taking various initiatives to promote tax compliance in Saudi Arabia, including the "Cancellation of Fines and Exemption of Penalties Initiative" and revised penalty structures for VAT and e-invoicing fines. These efforts are aimed at providing relief to taxpayers who have been penalized for various tax violations and promoting awareness of the consequences of non-compliance. As such, it is essential for businesses operating in Saudi Arabia to stay updated with the latest developments and regulations to ensure compliance and avoid penalties.

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