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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.
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.
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
Business owners who fail to pay the tax during a specific period are charged a certain amount, depending on the category, by the Saudi Arabia government, in the form of a penalty.
Taxpayers should make the payment of tax to the designated bank account of the GAZT (General Authority of Zakat and Tax) via a bank transfer using the SADAD payment system.
VAT penalties are additional fees that are added to your VAT tax bill in accordance with certain criteria. The amount you pay is calculated by multiplying the VAT arrears by a certain percentage. Every time you default on the payment, the percentage will rise accordingly.
5% of the value of the unpaid tax for each month or part thereof for which the tax has not been paid.
Not less than 5% and not more than 25% of the value of the tax due.
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