Saudi Arabian Zakat, Tax and Customs Authority (ZATCA) has introduced new guidelines to clarify VAT audit procedures and ensure better compliance with tax regulations.
The guidelines provide businesses with clear steps for audits, corrections, assessments, and appeals.
Under the new guidelines, businesses will receive at least 20 days notice before an audit, unless there is suspected non-compliance. Auditors may conduct on-site visits to review key documents such as VAT returns, invoices, contracts, and bank statements. For minor errors under SAR 15,000, businesses can correct them in future VAT returns. However, more mistakes must be reported to ZATCA within 20 days.
If a business disagrees with ZATCA’s decisions, they have the right to appeal either through internal committees or by escalating the case to the VAT Primary Committee. Penalties for non-compliance include fines for late registration, incorrect filings, or delayed payments, with fines potentially reaching up to 25% of the unpaid VAT. ZATCA also holds businesses and their advisors accountable for intentional violations.
The authority encourages businesses to maintain electronic VAT records, which will facilitate smoother audits and compliance.
These guidelines aim to provide businesses with a clearer understanding of their VAT responsibilities and support a more efficient tax system.
