KSA: The penalty waiver extended for six additional months

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24 January, 2021

In brief

The KSA Minister of Finance has issued a new Resolution aiming at extending the tax amnesty initiative launched earlier in 2020 for an additional six months. This would provide taxpayers with a full or partial waiver of Corporate Income Tax, Withholding tax, Value Added Tax and Excise tax penalties up until 30 June 2021. The waiver percentage (i.e. 100%, 75% or 50%) to be applied depends on the time the tax due is paid in full.

In detail

The KSA Minister of Finance has issued resolution No. 2303 dated 07/06/1442 AH (corresponding to 21 January  2021) in an objective to extend further support to the private sector and as a continuation of the fiscal stimulus initiatives package launched earlier in accordance with the Royal Decree No. 45089 dated 23/07/1441AH corresponding to 18 March 2020 and Royal Decree No.64539 dated 01/12/1441 AH corresponding to 22 July 2020.

This resolution applies a full or partial exemption from the penalties applied on Corporate Income Tax, Withholding Tax, Value Added Tax and Excise Tax under certain conditions.

The waiver applies to the following types of penalties:

  • Late payment penalties (all taxes)
  • Late submission of tax returns penalties (all taxes)
  • Tax return correction penalties (VAT only)

It is not clear however whether the waiver of late payment penalties apply as well to the Real Estate Transaction Tax that has been recently introduced on 4 October 2020.

Penalties waiver conditions and percentages

In order to benefit from the penalty waiver, the resolution requires the full payment of the tax liability associated with the tax return. A full or partial waiver is granted according to the period in which the full payment is made.

Tax liability payment period Percentage of penalty waiver
January 2021 – March 2021 100%
April 2021 – May 2021 75%
June 2021 50%

The aforementioned waiver also applies to penalties assessed by the General Authority of Zakat and Tax (‘GAZT’) on a tax return dule to be filed  before this resolution comes into force.

Taxpayers who paid their tax obligation due in full before this resolution entered into force will benefit from 100% of the unsettled penalties. GAZT also commits to waive these penalties if the conditions are met. Penalties already paid by the taxpayer prior to this resolution date will not be waived.

The resolution enters into force from the date of its issuance and would not apply to any violation related to tax evasion.

The Takeaway

The extension of the tax amnesty initiative provides an opportunity for taxpayers to correct legacy tax positions, amend tax returns with no penalties, improve their cash flow position and obtain a waiver for penalties yet unpaid.

Contact us

Mohammed Yaghmour

Leader, Zakat and Tax Leader - Saudi Arabia. Clients & Markets, PwC Middle East

Tel: +966 (12) 610 4400

Yaseen AbuAlkheer

KSA Tax Partner, PwC Middle East

Tel: +966544250540

Fehmi Mounla

Partner, Zakat and Tax, PwC Middle East

Tel: +966 2 610 4400

Mohammad Hussein Amawi

Partner, PwC Middle East

Tel: +966 126104400

Suleman Mulla

Partner, International Tax, PwC Middle East

Tel: +966 54 122 8051

Maher ElAawar

Partner, Middle East Indirect Tax and Fiscal Policy, PwC Middle East

Tel: +971 (0) 56 216 1109

Mohammed Al-Obaidi

Tax Partner, PwC Middle East

Tel: +966 1 465 4240

Fayez Aldebs

Partner in Tax, PwC Middle East

Tel: +966 11 0400

Soudki Zawaydeh

Partner, PwC Middle East

Tel: +966 11 465 4240

Chadi Abou Chakra

Partner, Indirect Tax and Fiscal Policy, PwC Middle East

Tel: +966 11 211 0400 Ext: 1858

Mohamed Harby

Partner, PwC Middle East

Tel: +966 56 907 2618

Ebrahim Karolia

Partner, International Tax and M&A Services, PwC Saudi Arabia

Tel: +966 11 211 0400 ext. 1771

Wael Osman

Tax & Zakat Partner, PwC Middle East

Tel: +966 13 849 6311

Mugahid Hussein

Partner in Tax, PwC Middle East

Tel: +966 (0)13 849 6311

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