Overview

The Zakat, Tax and Customs Authority (ZATCA) has relaunched the Tax Penalties Exemption Initiative for an additional six‑month period starting January 1, 2026, following the expiry of the previous waiver on December 31, 2025. The initiative grants relief from a broad range of penalties on filings and other tax obligations, excluding penalties related to evasion where such amounts became due before January 1, 2026, with the aim of supporting compliance and encouraging voluntary disclosure.

Scope of the Exemption

The initiative grants a waiver of penalties pertaining to the following:

• Registration: Late registration penalties under all tax systems.
• Tax Filing and Payment: Late filing of all tax returns, late payment, and VAT return corrections.
• Fines for violations of VAT field detection and e-Invoicing, based on Article 45 of the VAT Law, provided such violations do not constitute tax evasion. 

Initiative Period

January 1, 2026 – June 30, 2026

Taxpayers who regularize their tax positions during this period may benefit from full or partial penalty relief.

Eligibility Requirements

To qualify, taxpayers must:

• Be registered (or complete registration) through ZATCA’s portal.
• Submit all outstanding tax returns.
• Provide accurate and complete disclosures.
• Settle principal tax liabilities (the initiative covers penalties only) due as per returns.
• Submit installment requests, if needed, within the initiative period.

Exclusions

The initiative does not apply to:

• Principal tax amounts due.
• Penalties previously paid before the initiative period.
• Cases under litigation, unless the taxpayer settles the principal tax and withdraws the case.

Practical Considerations for Taxpayers

Taxpayers are encouraged to:

• Review historical tax filings.
• Identify and resolve any outstanding tax returns or unsettled liabilities to ensure full compliance.
• Reconcile VAT, withholding tax, and corporate income tax positions.
• Ensure full compliance with e‑Invoicing (FATOORA).

How Can A&M Assist?

Our team provides:

• Compliance health checks and gap assessments.
• Preparation and submission of voluntary disclosures.
• Support with ZATCA queries, audits, and clarifications.
• e‑Invoicing compliance reviews.
• Advisory on tax governance and risk mitigation.