Saudia Arabia to amend administrative penalties for tax law violations

2 min read
  • The change in the law expected to support tax registrants and help them fulfil their tax obligations

  • FTA confirms new laws will reduce administrative penalties for violators

Saudi Arabia’s Federal Tax Authority has confirmed that the new tax laws that are to come into effect on June 28 will reduce administrative penalties that have been imposed on those who violated such laws.

The change in the law, vide Cabinet Decision No 49 of 2021, is also expected to support tax registrants and help them fulfil their tax obligations, said local reports.

Khalid Ali Al-Bustani, director-general of the FTA, was quoted by the reports as saying about the amendment in a press release on Saturday, May 29: “This comes as part of the wise leadership’s directives to implement the tax system according to the best standards that ensure further growth for the national economy and help achieve transparency and economic momentum, providing an ideal and resilient tax legislative environment that encourages self-compliance and keeps pace with change through constant issuance of decisions in accordance with phased requirements.”

Al-Bustani called on tax registrants to take advantage of the important benefits provided by the new amendment as it provides more relief to business sectors in order to support their effective contribution to boosting the national economy’s growth.

He noted that under the amendment, 16 types of administrative penalties have either been reduced or had the method of calculation amended, explaining that the reductions include penalties for administrative violations on Tax Procedures, Federal Decree Law on Excise Tax, and Federal Decree Law on Value Added Tax.

Al-Bustani added: “The amendment includes fundamental amendments that provide more facilities to help taxable persons achieve self-compliance and encourage the speeding up of voluntary declaration. Under these amendments, a late payment penalty will not be imposed on voluntary disclosures if payment is settled within 20 business days of submitting the voluntary disclosure, and the sooner the taxable person declares and pays due tax according to periods of time specified by the decision, the lower the value of the penalties will be. This constitutes an incentive and a good opportunity for tax registrants who have errors in declarations, tax assessments, or requests for tax refunds, to speed up the implementation of voluntary declaration procedures and avoid increasing penalties.”

The authority noted in the press release that according to the amendment, it shall have to re-determine the administrative penalties imposed on the tax registrant prior to the effective date of the new amendment which have not been fully paid, to be equal to 30 percent of the total of such unpaid penalties, stressing that in order to benefit from such a scheme, the tax registrant is required to settle their payable tax in full by no later than December 31, and 30 percent of the total administrative penalties due and unpaid by June 27, by no later than December 31st. The authority shall determine the procedures necessary to implement this.