Saudi Arabia

Penalties for businesses if VAT Law fails to comply

The General Authority of Zakat and Tax (GAZT) of Saudi Arabia is moving swiftly towards implementation of the Value Added Tax (VAT) by 1 January 2018

Penalties for businesses if non-compliance with VAT Law.

• Failure to register for VAT – A penalty equivalent to double the amount of VAT payable

• Erroneous filing of VAT return – A penalty of not be less than 50% of the undeclared net VAT amount

• Overstating the refundable VAT amount – A penalty of not be less than 50% of the VAT refund claimed

• Delay in submission of VAT return – A penalty equivalent to a sum of SAR1,000 (US$267) and an additional amount equivalent to 5% to 20% of the VAT payable, which will vary depending on the number of days of delay in the filing of the VAT returns

• Nonregistration of invoice with the authority and charging VAT by an unregistered person – A penalty equivalent to SAR1,000 or double the amount of the VAT charged, whichever is higher

• Failure to maintain records under the VAT – A penalty equivalent to SAR1,000 or 2% of the average value of the monthly VAT supply, whichever is higher

• Non-compliance of the GAZT advice to submit requested information – A penalty of SAR1,000 or 2% of the average value of the monthly taxable supply, whichever is higher. However, the amount of fine shall not exceed SAR20,000 (US$5,333)

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