The initiative, now extended for an additional six (6) Gregorian months starting July 1, 2025, applies across all tax systems and offers exemption from:
- Late registration penalties
- Late payment penalties
- Late filing of tax returns
- VAT return correction penalties
- E-invoicing-related violations
- Other VAT-related penalties
This extension reflects the government’s continued commitment to supporting businesses in meeting their compliance obligations and strengthening overall tax transparency. For businesses, the implications are significant.
The waiver of fines and penalties can provide immediate cash flow relief, easing short-term financial pressures. Additionally, the extension offers a valuable compliance window for companies that may have fallen behind on filings or registrations, providing a structured opportunity to return to compliance without incurring additional financial burdens.
From an operational risk perspective, this initiative allows businesses to review their historical tax positions, address any legacy exposures, and reduce the risk of future penalties or regulatory scrutiny. It also presents an opportunity for strategic planning, encouraging businesses to reassess their tax governance frameworks and ensure that internal processes are fully aligned with ZATCA’s evolving requirements, particularly in relation to e-invoicing and VAT reporting.
Eligibility Requirements
To qualify for the exemptions, taxpayers must:
- Be registered, or complete registration, during the initiative period
- Submit all outstanding tax returns
- Fully disclose any previously undeclared taxes
- Pay all principal tax liabilities in full
- (Optional) Apply for an installment payment plan within the initiative period and comply with the approved schedule
Exclusions: The initiative does not apply to all tax-related fines. Specifically, it excludes fines related to tax evasion, fines that were paid before July 1, 2025, and fines associated with tax returns that are due after June 30, 2025. These categories remain fully enforceable and are outside the scope of the current exemption.
Businesses should proactively conduct an immediate tax health check to identify and address any compliance gaps. It is important to prioritise the settlement of outstanding tax liabilities to take full advantage of the available penalty waivers. Additionally, companies should carefully assess whether any legacy issues related to VAT, corporate tax, or e-invoicing necessitate further disclosure or correction. This is a time-sensitive opportunity that can offer significant financial and operational benefits if managed effectively.
To discuss how this extension may impact your business, please get in touch with our tax team. We can support you in reviewing your tax position, filing outstanding returns, and structuring appropriate payment plans where required.
