Saudi Arabia revises VAT fine protocols

Saudi Arabia’s tax authorities will now issue a warning for first-time VAT noncompliance. Rather than impose an immediate fine, the ZATCA will notify taxpayers of their obligations. If the offence is repeated, then authorities will issue a fine. 

The decision only covers a limited number of violations. These include failures to properly keep invoices, incorrectly calculating tax owed and failures to issue credit notes. Note that violations such as tax evasion, failure to file returns and manipulating VAT returns are still subject to an immediate fine.  

Boosting Saudi Arabia’s private sector

Saudi Arabia’s tax authorities say the decision will help support businesses and improve compliance rates “by providing an opportunity for establishments to identify and

address violations before applying penalties, as violations begin by alerting first and educating the taxpayer before the fine.”

VAT e-invoicing requirements 

Saudi Arabia has fairly stringent guidelines for meeting its mandatory e-invoicing protocol.  ZATCA had previously warned taxpayers they would be subject to a fine if they fail to store e-invoices, omit the mandatory QR code or amend e-invoices after they are issued. 

Despite the commitment to providing fair warning to taxpayers who make invoicing errors, taxpayers should not be complacent. Saudi authorities will continue to issue fine and penalties for repeat noncompliance. 

In order the meet the exacting e-invoicing standards, all VAT registered entities should therefore ensure they have the technology and guidance they need to remain 100% compliant. 

An integrated VAT solution 

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