Saudi Arabia

Taxable period

Tax filings are based on the company’s fiscal year.

Tax returns

Returns are due to be filed with ZATCA within 120 days after the taxpayer’s year-end. The system is one of self-assessment.

According to the tax authority, companies that are owned by Saudis only, or by Saudis and non-Saudis, must file audited financial statements along with the tax return.

Payment of tax

Final tax due must be paid within 120 days after the taxpayer's year-end.

Three equal advance tax payments are required to be made on the last day of the sixth, ninth, and 12th months for a current tax year, provided that the taxpayer has earned income during the year. Each advance payment is equal to 25% of the amount resulting from the taxpayer’s tax liability based on the previous year return minus the withheld tax on reported income, if any. The taxpayer is not required to make advance tax payments if the result of the said formula is less than SAR 500,000. Late payment of an advance payment is subject to a delay penalty of 1% of the amount due for every 30 days of delay.

Tax audit process

There is no specific audit process followed by ZATCA; however, the most common ways for ZATCA to select companies for tax audits are the size of the company, the companies’ shareholders nationality (totally owned by foreigners and branches of foreign companies), and certain risk assessment measures.

ZATCA recently introduced what they call the 'risk engine', which is used to determine the companies that need to be audited. However, such engine has not been tested yet.

Statute of limitations

ZATCA may, with a reasoned notification, make or amend a tax assessment within five years from the end of the deadline specified for filing the tax declaration for the taxable year, or, at any time, upon a written consent of the taxpayer.

ZATCA may make or amend an assessment within ten years of the deadline specified for filing the tax declaration for the taxable year if a taxpayer does not file its tax declaration or it is found that the declaration is incomplete or incorrect with the intent of tax evasion.

A taxpayer may request a refund of overpaid amounts at any time within five years from the end of the overpaid taxable year.

Topics of focus for tax authorities

ZATCA emphasises the reconciliation between the payroll as per the records of the General Organisation for Social Insurance (GOSI) (i.e. salaries and wages subject to GOSI) and salaries and wages charged to the taxpayer’s accounts duly certified by a Saudi licensed CPA.

ZATCA focuses on the payments made to non-resident parties to verify compliance with the WHT regulations by requesting a reconciliation statement for such payments with the annual WHT form.

ZATCA has also been requesting import value lists from the Customs Authority in order to confirm the value of goods imported and declared by taxpayers in their annual declarations during the financial period.