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| 18 October, 2017

Saudi clarifies penalties for tax violations

Image used for illustrative purpose. Saudi Riyals.

Image used for illustrative purpose. Saudi Riyals.

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A penalty of up to 50,000 Saudi riyals ($13,332) will be imposed for violations related to excise tax, the General Authority of Zakat and Tax in Saudi Arabia has said. Failing to submit a VAT return within the specified period leads to a fine between 5 percent and 25 percent of the tax value that should have been declared, the law states.

A penalty of up to 50,000 Saudi riyals ($13,332) will be imposed for violations related to excise tax, the General Authority of Zakat and Tax in Saudi Arabia has said.

The authority said via its twitter account that excise tax violations will include obstructing authority employees from performing their duties, declining to give information required by the authority, or failing to declare notifiable changes within the required timeframe.

The Saudi tax authority also announced the launch of an official interactive twitter account (@saudivat) to clarify queries relating to value-added tax (VAT) and to refute misleading information. VAT is set to be introduced into the Kingdom from January 1, 2018.

A fine of 10,000 Saudi riyals will be imposed on eligible entities for VAT that do not register within the specified deadline, the authority said on its official website.

The kingdom recently extended the registration deadline for small businesses with annual taxable supplies of goods and services that do not exceed one million Saudi riyals until 20th December 2018. All other eligible entities are required to register by 20th December, 2017.

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Any person deemed to have evaded VAT will be subject to a fine of at least the amount of the tax due and at most three times the value of goods and services subject to evasion, according to the VAT law. Any individual submitting forged or false documents or declarations is considered to be a tax evader.

Failing to submit a VAT return within the specified period leads to a fine between 5 percent and 25 percent of the tax value that should have been declared, the law states.

“Companies with annual value of taxable supplies more than 40 million Saudi riyals are required to pay on a monthly basis,” Mahmoud Mozahim, a Riyadh-based tax manager at accountancy network Integra International, clarified to Zawya in a telephone interview.

“All other taxable entities are required to pay on a quarterly basis with a tax period time-frame of 3 months,” he added.

A monthly penalty of 5 percent of the VAT tax due will be levied on the person who fails to pay the due tax within the required timeframe.

Any entity that files an incorrect tax return resulting in lower tax value will be subject to a penalty of 50 percent of the difference between the calculated tax and the correct amount due.


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© ZAWYA 2017