Riyadh, Saudi Arabia – In a major relief measure designed to support corporate scaling and ease the administrative burden on businesses, the Zakat, Tax and Customs Authority (ZATCA) has announced a comprehensive extension of its Cancellation of Fines and Exemption of Penalties Initiative until June 30, 2026. Originally scheduled to expire, this extension provides local and international corporations with additional time to regularize their tax affairs without incurring financial penalties.
Waiver Scope & Eligible Taxes
The initiative covers a broad spectrum of tax categories and applies to all registered taxpayers who fulfill the eligibility criteria:
- Corporate Income Tax: Complete waiver of late registration and late filing penalties for corporations operating in the Kingdom.
- Value Added Tax (VAT): Exemption from penalties related to late VAT filings, late payments, and e-invoicing (Fatoora) integration delays.
- Withholding Tax (WHT): Waivers on fines stemming from delayed withholding tax declarations on international payments.
- Excise Tax & Customs: Exemptions for late filing and payment penalties across excise taxes and customs declarations.
Exemption Requirements
To benefit from the penalty waiver, ZATCA has outlined specific compliance conditions that taxpayers must satisfy before the June 30, 2026 deadline:
- Submission of Returns: The taxpayer must submit all previously unfiled tax returns and declarations to the authority.
- Payment of Principal Tax: The taxpayer must pay the full principal tax liability due under the returns. Alternatively, they can apply for and secure an approved installment plan from ZATCA to settle the principal amount over an agreed timeline.
- Voluntary Disclosure: The initiative encourages businesses to voluntarily disclose previous filing errors or omissions to benefit from the amnesty.
What This Means for Foreign Investors
For foreign businesses that have recently entered the Saudi market or are in the middle of corporate structuring, this extension provides a valuable buffer. It allows companies to conduct internal audits, correct any historical compliance errors, and complete e-invoicing integrations without the risk of costly penalties, ensuring a clean and compliant corporate record.