What Has ZATCA Announced?
Saudi Arabia’s Zakat, Tax and Customs Authority (ZATCA) issued a decision on June 29, 2026 extending its initiative to cancel fines and financial penalties under its tax and zakat regimes. The extension applies from July 1, through December 31, 2026. (zatca.gov.sa)
Who Qualifies & What Is Included?
To benefit from the initiative, taxpayers must satisfy several conditions:
- Be registered under any of the tax systems.
- Submit all due returns and fully pay the principal tax/duty owed.
- May apply to pay via an approved installment plan, but must apply during the initiative.
The relief covers:
- Late registration penalties
- Late payment penalties
- Late filing penalties under all tax regimes
- Also specifically VAT correction penalties
Exceptions include:
- Penalties resulting from tax evasion violations
- Penalties under Article 45 of the VAT law
- Penalties for returns due after June 30, 2026 (i.e. new non‐compliance beyond that date are not covered)
- Penalties that were already paid before the start of the initiative. (zatca.gov.sa)
What Should Taxpayers Do Now?
- Determine your outstanding compliance: identify all missing returns, unpaid tax, or penalties accumulated before July 1, 2026.
- Submit everything by December 31, 2026 to benefit—missing the deadline means you won’t get relief for later‐period failures.
- If paying full amounts isn’t feasible, apply for installment plans under the initiative.
- Gather proof of registration, payment capability, and all documentation to show obligations are met.
Practical Example
A business that has not filed VAT returns for Q1 and Q2 of 2026, and owes VAT plus penalties, can submit those returns before December 31, 2026, pay the VAT amount without penalties, and if needed, opt for installment payments, so long as the principal is fully covered and other conditions are satisfied.
Strategic Value
- Reduces legal and financial risk for businesses currently non‐compliant.
- Opportunity to clean up VAT or other tax records with zero penalty cost, boosting investor confidence.
Key Takeaway
With the initiative expiring at the end of 2026, action is time-sensitive. Even though the announcement was in mid-2026, the window remains open. Taxpayers should prioritize compliance tasks now to avoid unnecessary costs or enforcement actions later.