Fines and Financial Penalties Exemption by ZATCA, Saudi Arabia

Updated On : Jan 22nd, 2025 | 23 min read

The Zakat, Tax and Customs Authority (ZATCA) re-launched an initiative to cancel fines and exempt financial penalties imposed on taxpayers for six months, beginning on June 1, 2022, and ending on November 30, 2022. This program was introduced to mitigate the financial strain on businesses impacted by the COVID-19 pandemic.

Note (Updated): While the exemption period mentioned above ended on November 30, 2022, ZATCA has periodically introduced and extended certain programs to support taxpayers. As of the latest press releases in 2023 and 2024, there have been no further blanket extensions of this specific exemption initiative. However, ZATCA continues to announce targeted relief measures on a case-by-case basis. Taxpayers are advised to regularly monitor official ZATCA announcements for any new or upcoming relief programs.

Scope of the Exemption

Under the initial exemption (June 1 – November 30, 2022), the cancellation of fines covered the following areas:

1. Late registration in all tax systems
2. Late payments
3. Late submission of returns
4. Corrections to VAT returns
5. Violations of VAT field control related to e-invoicing regulations
6. Other general regulations under ZATCA’s purview

Eligibility Criteria

To qualify for and fully benefit from the exemption initiative (when it was in effect), ZATCA specified the following requirements:

1. VAT Registration: Individuals or entities not yet registered for VAT had to register.
2. Submission of All Due Returns: Any outstanding returns had to be filed.
3. Disclosure of Undeclared Taxes: Any previously undisclosed taxes needed to be reported.
4. Payment of Tax Debt: All outstanding tax debts had to be settled or scheduled under an approved installment plan.

Note (Updated): Even though the broad exemption period has closed, taxpayers who fall behind on payments or disclosures should still proactively contact ZATCA. The authority may allow installment plans or other accommodations to facilitate compliance and minimize penalties, but these are handled on a case-by-case basis.

Exclusions from the Initiative

The following were explicitly not included in the original initiative:

1. Tax evasion violations
2. Fines paid before the initiative’s effective date
3. Late payment fines related to any tax installment due after November 30, 2022

Contacting ZATCA

If you have questions regarding any ZATCA initiatives, exemptions, or e-invoicing requirements, you can reach the authority via:

1. Unified Call Center: 19993 (available 24/7)
2. Twitter: @Zatca_Care
3. Email: info@zatca.gov.sa
4. Instant Chat: ZATCA’s official website

E-Invoicing Compliance: Phase I and Phase II

Phase I: Core E-Invoicing Requirements

Phase I of e-invoicing became mandatory on December 4, 2021, requiring businesses to generate and store invoices electronically. Despite the pandemic-related leniencies in fines, ZATCA has emphasized that compliance with e-invoicing is non-negotiable and critical for modernizing Saudi Arabia’s tax ecosystem.

Phase I: Core E-Invoicing Requirements

Phase II (Integration Phase) began rolling out in January 2023, requiring additional technical integrations and real-time data sharing with ZATCA’s systems. This roll-out is being implemented in waves throughout 2023 and beyond, with each wave introducing more taxpayers into the integration scope.

Important Updates for 2023 and 2024:

1. Businesses are being notified by ZATCA via email or SMS about their specific integration deadlines.
2. ZATCA has released new guidelines on e-invoicing compliance, including stricter requirements for cryptographic seals and QR codes on invoices.
3. Penalties for non-compliance can be substantial, including fines for missing or incorrect invoice details.

To avoid last-minute hassles and ensure smooth compliance, implement a robust e-invoicing solution that meets ZATCA’s Phase II technical specifications. Non-compliant businesses risk penalties that may not be covered under any future exemption program.

Conclusion

Although the broad fines and penalty exemption window introduced in mid-2022 has ended, ZATCA continues to facilitate compliance and modernization through targeted relief measures and ongoing e-invoicing initiatives. Whether you are a small business or a multinational enterprise, staying updated on ZATCA announcements and adhering to e-invoicing requirements is paramount.

1. Final Tip: Regularly visit ZATCA’s official website and subscribe to official newsletters or notifications to remain informed about new exemptions, deadlines, and regulations.

Stay proactive, remain compliant, and leverage digital tools to thrive in Saudi Arabia’s rapidly evolving economic environment.

About Accqrate

Accqrate is a leading Saudi-based ERP and e-invoicing solution provider, offering holistic accounting services, advanced e-invoicing integrations, and a comprehensive ERP suite—including POS systems. Recognized as one of the most cost-effective platforms in the Kingdom, Accqrate seamlessly integrates with ZATCA’s Accqrate Fatoora portal, ensuring straightforward Phase 2 compliance. Powered by GenAI and GPT technologies, the platform intelligently boosts user productivity and streamlines inter-department collaboration.

Built with flexibility and scalability at its core, Accqrate provides both cloud and on-premise solutions, facilitating the digital transformation journey for businesses across Saudi Arabia. Trusted throughout MENA, Europe, and ASEAN, Accqrate is a global solution partner empowering organizations to achieve operational excellence.