Tax Amnesty scheme extended till December 31, 2024- Applicability, conditions and next steps

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In an effort to alleviate the financial challenges posed by the Covid-19 pandemic and to emphasize the importance of tax compliance, the Zakat, Tax, and Customs Authority (ZATCA) introduced the “Cancellation of Fines and Exemption of Financial Penalties” initiative.

This initiative aims to exempt certain fines and penalties under various tax laws, provided that specific conditions are met. Initially set to end on June 30, 2024, ZATCA announced a further six-month extension, pushing the deadline to December 31, 2024. 

Hence, if you have not already availed the benefits under this initiative, this refresher is for you.

What’s included and what’s excluded?

The initiative covers penalties and fines related to Corporate Income Tax, Withholding Tax, Value-added Tax, Excise Tax and Real Estate Transaction Tax. The coverage period starts from June 1, 2022, and extends until the end of the initiative. 

The types of unpaid fines included under this initiative are:

1. Late registration

2. Late payment

3. Late filing

4. Amendment/corrections in VAT returns (whether initiated by taxpayer or by ZATCA)

5. VAT field detection and e-invoicing related fines

However, the initiative does not cover fines that were paid before June 1, 2022, nor does it include fines related to tax evasion, even if the said fines fall under the above five categories.

Conditions to avail the benefit

To take advantage of this initiative, taxpayers must comply with the following conditions:

• Apply for registration wherever required
• File all outstanding tax returns
• Pay all outstanding dues or submit an installment plan that must be approved by ZATCA

It is worth noting that the installment plan approved by ZATCA will not attract any late payment fines even if the payment dates fall after the end of the initiative. However, in case of non-compliance of the installment plan conditions, all the fines due shall be calculated as of the original due date of payment. 

Next steps

To benefit from this relief, taxpayers should follow these steps:

1. Conduct a thorough review: Examine your tax systems and tax returns to identify any outstanding registrations, returns, or fines due under any tax laws from June 1, 2022, onwards.

2. Review ZATCA assessments: Check the evaluations and assessments raised by ZATCA to calculate any outstanding dues.

3. Submit revised returns if necessary: If discrepancies are found, submit revised returns promptly.

4.Fulfill amnesty conditions: Ensure you meet all the conditions by registering, filing returns, or paying the outstanding dues.

5.Apply for an installment plan if needed: If you are unable to clear the fines and penalties immediately, apply for an installment plan approved by ZATCA.

6. Ensure compliance: Adhere strictly to the terms of the approved installment plan to avoid recalculated fines.

Final thoughts

By extending the tax amnesty scheme, ZATCA provides taxpayers with additional time to comply with tax laws and settle their dues without incurring additional fines and penalties. This extension aims to support taxpayers in managing their financial obligations, while also encouraging a culture of compliance and transparency in tax matters.

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