Saudi Arabia to Introduce Stronger Tax Evasion Detection Methods
Government Aims to Curb Tax Evasion and Improve Revenue Collection
Riyadh, Saudi Arabia - The Zakat, Tax and Customs Authority (ZATCA) has proposed amendments to the Value-Added Tax (VAT) Law in Saudi Arabia as part of its efforts to combat tax evasion and enhance revenue collection. The new measures aim to detect and penalize taxpayers who fail to submit their tax returns or pay their dues on time.
Proposed Amendments
- A penalty of 2% of the tax value due will be imposed on taxpayers who fail to submit their tax return, up from the current range of 5-25%.
- A non-obstante clause has been proposed to impose a minimum fine of SAR 1,000 for failure to submit a tax return, followed by SAR 500 for exceeding one month’s period.
- ZATCA may issue notices to third parties instructing them to pay directly to ZATCA any amounts owed by the third party to the taxpayer.
Additional Fines
- A fine equivalent to 2% of the unpaid tax value will be imposed for each month with a maximum of 50% of the unpaid tax value.
- An additional fine equivalent to 1% of the unpaid tax value will be imposed for each month where additional VAT liability is required to be paid by the taxpayer as part of an assessment being conducted by ZATCA.
Public Consultation
The proposed amendments are open for public consultation until March 12, 2023. Interested stakeholders can share their views and highlight improvement areas regarding the proposed changes through the prescribed channel.
Key Takeaways
- A penalty of 2% of the tax value due will be imposed on taxpayers who fail to submit their tax return.
- A non-obstante clause has been proposed to impose a minimum fine of SAR 1,000 for failure to submit a tax return, followed by SAR 500 for exceeding one month’s period.
- ZATCA may issue notices to third parties instructing them to pay directly to ZATCA any amounts owed by the third party to the taxpayer.
Contact
For a deeper discussion of how these changes might affect your business, please contact:
Mohammed Yaghmour +966 56 704 9675 mohammed.yaghmour@pwc.com
Middle East Tax & Legal Services Leader PwC Saudi Arabia