Saudi Arabia Reintroduces Tax Amnesty Initiative to Support Businesses Affected by COVID-19

Overview

The Zakat, Tax and Customs Authority (ZATCA) has relaunched a tax amnesty program to provide relief to businesses in Saudi Arabia affected by the ongoing economic impact of the COVID-19 pandemic. The initiative aims to cancel fines and financial penalties for certain taxes from June 1, 2022, to November 30, 2022.

What’s Covered

The amnesty covers a range of taxes, including:

• Value-Added Tax (VAT)
• Withholding Tax (WHT)
• Excise Tax
• Income Tax
• Real Estate Transaction Tax (RETT)

Businesses that participate in the initiative will be exempt from unpaid fines related to these taxes, including those resulting from late registration, payment delays, and corrections to VAT returns.

Conditions for Participation

To benefit from the initiative, businesses must meet the following conditions:

• Full payment of the principal tax due
• Filing of any unfiled returns

The ZATCA has issued Simplified Guidelines for the 2022 tax amnesty initiative, which provide a detailed overview of the program’s requirements and benefits.

Key Exclusions

The amnesty does not apply to:

• Fines paid before the effective date of the initiative
• Tax evasion violations
• Businesses with outstanding tax principal included in an installment plan that becomes payable after the expiration of the amnesty period on November 30, 2022

Next Steps

Businesses in Saudi Arabia affected by the COVID-19 pandemic are encouraged to review their ongoing compliance practices and assess whether the tax amnesty initiative may benefit them. Participating businesses can take advantage of the relief offered by the ZATCA to mitigate the economic impact of the pandemic on their operations.

For more information about this alert, please contact EY Consulting LLC in Dubai, Ernst & Young Professional Services in Riyadh or Al Khobar, or Ernst & Young LLP (United States) Middle East Tax Desk in New York.