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The Cancellation of Fines and Exemption of Financial Penalties is the second initiative taken by the Zakat, Tax, and Customs Authority (ZATCA) to reduce the financial implications of COVID 19 on establishments and taxpayers for a period of six months commencing on June 1, 2022.
The ZATCA has clarified the types of fines and violations covered by this initiative, as follows:
1. Exemption from unpaid financial penalties including:
- Fine for late registration in all tax systems.
- Fine for late filing and payment of tax returns in all tax systems.
- Fine for correcting VAT returns.
- Fines for field detections of violations of VAT and E-invoicing.
2. The exemption is subject to specific conditions, such as:
- Registration in the Tax System in which registration was required for those non-registered persons.
- Providing all necessary returns to the ZATCA not provided previously, or disclosure of all taxes that have been incorrectly disclosed, and payment of full tax debt principal related to the tax returns to be filed or amended in order to correctly disclose the Tax Liabilities due.
3. The possibility of settling dues via installments specified and approved by (ZATCA).
4. This initiative is valid for six months starting from June 1, 2022, until November 30, 2022.
The Types of taxes included by the initiative are:
- Income Tax.
- Withholding Tax.
- Value Added Tax.
- Real Estate Transaction Tax.
- Excise Tax.
The initiative does not include the following:
- Fines that have been paid before the effective date of this initiative.
- Fines resulted from Tax Evasion Violations.
- Fines of delay in payment associated with the Tax principal included in an Installment Plan approved by (ZATCA) which will become due after the expiration of the initiative on November 30, 2022.
There are conditions required for benefiting from the initiative, as follows:
The Taxpayer shall be exempted from the following:
1. Fines for late registration in tax systems pursuant to the following conditions:
- Registering along with specifying the date on which the registration should have been.
- Providing all past due tax returns.
- Payment of full Tax debt principal due resulting from the tax returns that have been submitted.
2. Fines for late filing of the tax return that must be submitted to (ZATCA) prior to the effective date of the initiative on all tax systems according to the following conditions:
- Providing un-submitted tax returns and payment of full tax debt principal associated with the fine resulted from submitting.
3. Fines for late payment of tax returns that must be paid prior to the effective date of the initiative on all tax systems, whether the unpaid amounts resulted from the taxpayer’s self-disclosure or from ZATCA’s assessment, provided that:
- The full tax debt principal associated with the unpaid fine which resulted from late filing, self-disclosure, or assessment of the Authority is paid.
4. Fine for amending VAT returns whether the correction had been made by the taxpayer as a result of disclosure, or as a result of a correction done by the Authority provided that:
- The full tax debt principal that resulted from correction is paid.
5. The un-paid financial fines due to the field detection violations for VAT and electronic invoicing provided that:
- The taxpayer should have neither any unfiled tax returns to (ZATCA) nor an unpaid tax debt principal. if the taxpayer has an unfiled tax return or an unpaid tax debt principal, then the taxpayer could only benefit from the exemption by providing all unfiled tax returns.
- Any outstanding tax debt principal is paid.
