Fines & Penalties under VAT in Saudi Arabia

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Tally Solutions, Feb-03-2020

Every person registered under VAT in Saudi Arabia has to ensure that their business activities are in compliance with the VAT law and rules. The VAT law provides for the levy of penalties in the case of non-compliance by a person. It is important for taxable persons to be aware of the actions which count as violations of the law and the penalties due in such a case. In this article, let us understand the penalties under VAT in Saudi Arabia.

Fines & Penalties under VAT in Saudi Arabia

Violation

Penalty

Tax Evasion

Submitting false, forged or artificial documents, declarations, registers or information with the intent to evade the payment of tax due, reducing its value or unlawfully obtaining refunds for tax

Not less than the amount of tax due and not more than three times the value of the goods or services

Entering or attempting to enter KSA or remove goods or services from KSA, in violation of the applicable laws, without paying the tax in whole or in part

Other Violations

Person who has not applied for registration within the specified period

SAR 10,000

Person who files an incorrect tax return, amends a tax return after filing or files any document in relation to the tax due from him, resulting in an amount that is less than the tax due

50% of the value of the difference between the calculated tax and the tax due

Person who fails to submit a tax return within the specified period

Not less than 5% and not more than 25% of the value of the tax due

Person who fails to pay the tax due during a specified period

5% of the value of the unpaid tax for each month or part thereof for which the tax has not been paid

A non-registered person issuing a tax invoice

SAR 100,000 or less

A person who has not kept tax invoices, books, records and accounting documents for the specified period

SAR 50,000 or less per tax period

A person who prevents or obstructs GAZT (General Authority of Zakat and Tax) employees from performing their duties

SAR 50,000 or less

Violation of any other provision of the VAT regulations or the VAT law

SAR 50,000 or less

Hence, the penalties for non-compliance under VAT are quite stringent. In addition to the above penalties, taxpayers should be aware that a decision to levy a penalty for non-compliance with the provisions of the law may be accompanied by the publication of the content of the penalty in a local newspaper issued in the person’s place of residence, at the cost of the person penalized. If there is no newspaper in the person’s place of residence, it may be published in a local newspaper in the area nearest to him or by any other appropriate means, depending on the type of violation, its gravity and its effects.

Appeal against VAT Penalty in Saudi Arabia

A person who has received a decision for a penalty can file a grievance before the competent judicial authority within 30 days from the date the decision was known. If this is not done, the decision of the GAZT will be considered as final and cannot be appealed before any other judicial authority.

Hence, taxpayers should be aware about the above actions which qualify as violations under VAT and the penalties applicable in each of these cases. It is important to avoid these scenarios and ensure a record of good compliance under the VAT law in Saudi Arabia.

You can download the penalty list (pdf file) right away! Download