In late January 2021, the Ministry of Finance (MOF) of the Kingdom of Saudi Arabia (KSA) announced a further extension of the tax amnesty scheme to June 30, 2021. The tax amnesty scheme, introduced in 2020, provides taxpayers with the opportunity to regularize their tax positions and related reporting regarding the KSA corporate income tax, withholding taxes and value added tax. With the KSA General Authority for Zakat and Tax (GAZT) having become much more assertive on tax compliance over the past year, we have witnessed an increasing number of international taxpayers successfully using the scheme.
- Paid between January and March 2021: 100 percent exemption of fines
- Paid between April and May 2021: 75 percent exemption of fines and
- Paid during the month June 2021: 50 percent exemption of fines.
The exemption measures also apply to fines charged due to tax assessments or re-evaluations by the GAZT on tax returns submitted before January 21, 2021 and provided that the original tax amounts due are fully paid during the amnesty period. It should be noted that the following fines are excluded from the amnesty measures:
- Fines imposed by the GAZT other than for late submission, late payment or correction of tax returns
- Fines imposed due to tax evasion violations and
- Fines paid before the date of the recent announcement (ie, 21 January 21. 2021).
The tax amnesty scheme represents an excellent opportunity for taxpayers to remediate any past omissions (eg, of tax registration), errors or mistakes before June 30, 2021. In practice, a wide variety of international businesses have used the tax amnesty scheme, including overseas digital businesses selling services to KSA customers and international groups with a permanent establishment tax exposure in the KSA, among others.
With the sliding scale of the applicable exemptions towards to the extended deadline of June 30, 2021, swift action by international taxpayers with (unreported) KSA tax exposures would safeguard the greatest benefits under the scheme.