The Zakat, Tax and Customs Authority (ZATCA) announced an important decision that serves the interests of the business sector and taxpayers, which is to extend the initiative to exempt from fines and similar financial penalties until June 30, 2026.
This decision comes as a continuation of the Authority's efforts to support taxpayers and enable them to rectify their financial and tax situations. ZATCA explained that the initiative includes exempting taxpayers from penalties for late registration in all tax systems, late payment penalties, and late filing of tax returns in all tax systems. The exemption also extends to penalties for correcting VAT returns, in addition to penalties for field inspection violations related to the application of electronic invoicing provisions and other general VAT regulations.
Conditions for benefiting from the initiative
The Authority has established a set of criteria for benefiting from this extension, most notably that the taxpayer must be registered in the tax system and must submit all required tax returns to the Authority, along with paying the full principal amount of the tax due related to those returns. To facilitate matters for taxpayers, the Authority has made it possible to apply for an installment plan, provided that the application is submitted during the initiative's validity period and that the taxpayers adhere to the approved payment schedule. The Authority also clarified that the initiative does not cover penalties related to tax evasion violations or penalties paid before the initiative's effective date.
Context of the initiative and its economic importance
This step is of paramount importance in the Kingdom's current economic context, as the initiative, since its launch, has aimed to mitigate the economic and financial impact on businesses, particularly small and medium-sized enterprises (SMEs), and to enhance their compliance with tax regulations without imposing additional burdens resulting from previous penalties. This extension provides a further opportunity for businesses that were previously unable to rectify their situations, thus strengthening their financial stability and encouraging voluntary compliance.
At the national level, this decision contributes to raising tax compliance rates, a key objective of the Kingdom's Vision 2030, which aims to enhance financial transparency and regulate the economic environment. The extension also supports the digital transformation of financial transactions, particularly with the implementation of electronic invoicing, giving companies ample time to adapt to technical requirements and correct any unintentional errors without fear of hefty financial penalties.
The Zakat, Tax and Customs Authority called on all taxpayers to review the full details through the simplified guide available on its website, which includes a comprehensive explanation of the types of fines covered, the steps for submitting installment requests, and illustrative examples of field control violations covered by the exemption.
