1Version 3 | May 2026

Increase the penalty by (10%) if the taxpayer's compliance record is very weak. Increase the penalty by (5%) if the taxpayer's compliance record is weak. Increase the penalty by (5%) if the percentage of the difference between the calculated tax and the tax due (payable or refundable), related to the total periods subject to adjustment, represents more than (20%) for returns related to monthly tax periods, or more than (40%) for returns related to quarterly tax periods. Secondly: Penalty Reduction (Mitigating Factors) The Authority may reduce the percentage of the penalty related to the violation of "submitting an incorrect tax return, or amending a tax return after submission, or submitting any document to the Authority concerning the tax due that resulted in an error in calculating the tax amount as less than what is due" down to zero percent (0%), if one or more of the mitigating factors for the penalty apply, as follows: Reduce the penalty by (5%) if the taxpayer's compliance record is good. Reduce the penalty by (5%) if the percentage of the difference between the calculated tax and the tax due (payable or refundable), related to the total periods subject to adjustment, represents less than (5%) for returns related to monthly tax periods, or less than (15%) for returns related to quarterly tax periods. Reduce the penalty by (10%) when the taxpayer pays the value of the difference between the calculated tax and the tax due (which is payable) within thirty (30) days of the assessment decision issued by the Authority. Reduce the penalty by (15%) when the taxpayer is classified as a micro-enterprise. For these rules, an enterprise is considered a micro-enterprise if the value of its annual taxable revenues does not exceed SAR 3,000,000 during the twelve months preceding the tax period subject to examination and assessment. No more than one factor shall be combined regarding the mitigating factors mentioned above, except the factors for paying the tax due mentioned in these provisions. Notwithstanding the provisions in this clause (Secondly), the penalty percentage shall not be reduced if the error contained in the return is linked to a case of tax evasion for which a decision has been issued by the Authority. Thirdly: Provisions for Determining Taxpayer’s Compliance The Authority shall determine the level of the taxpayer’s compliance based on the number of errors contained in their previous tax returns concerning the timely submission of returns and/ or the timely payment of the tax due, as follows: A taxpayer’s compliance is considered ‘good’ if there have been no violations during the last twelve months. A taxpayer’s compliance is considered ‘weak’: y For a taxpayer who submits returns monthly, upon committing more than two violations up to six violations during the last twelve months. y For a taxpayer who submits returns quarterly, upon committing one or two violations during the last twelve months. A taxpayer’s compliance is considered ‘very Weak’ y For a taxpayer who submits returns monthly, upon committing more than six violations during the last twelve months. y For a taxpayer who submits returns quarterly, upon committing more than two violations during the last twelve months. Fourthly: Cases Where the Tax Return Error Penalty is Not Imposed The tax return error penalty shall not be imposed in the following cases: When the taxpayer corrects the return in accordance with the provisions of Article 63 of the Implementing Regulations of the VAT Law, provided this is done before they are notified by the Authority of the start of examination and audit procedures. If the difference between the calculated tax and the tax due is less than SAR 5,000. Fifthly In the event that the taxpayer corrects the return through the self-disclosure form after being notified of the start of examination and audit procedures, and if the correction exceeds fifty percent (50%) of the tax differences determined as a result of the examination and assessment, the penalty shall be reduced to ten percent (10%). If the taxpayer pays the value of the tax due and payable within thirty (30) days from the date of the assessment notification, the penalty shall be reduced to zero percent (0%). It should be noted that, in all cases, the late payment penalty—when applicable—is calculated at (5%) of the value of the tax due for every month or part of a month. Field Violations All field violations, upon commission, begin with a warning and educating the violator about the violation and giving them an appropriate grace period of (30) to (60) days to rectify it, with the exception of the violation related to preventing or obstructing the Authority’s employees from performing their duties and tasks. In this case, the violator is granted a period not exceeding ten (10) days from the date the last penalty was imposed to correct the violation, which will be imposed consecutively if the violator repeats its commission. To view the classification table of general VAT violations and the specific violations and penalties related to the provisions of the E-invoicing regulation, please refer to the Guideline for the Classification of General VAT Violations. 11. Request for an Interpretative Decision (Tax Ruling) In the event that a Person is not sure about the manner of application of VAT to a particular activity or particular transaction that it is doing or intends to do, after referring to the relevant provisions and the relevant guideline, the Person may submit an application to the Authority to obtain an interpretive decision, in accordance with the Tax Ruling Requests Guideline. Scan this code to view the last version and all published documents Or visit the website zatca.gov.sa