On 29 June 2026, the Zakat, Tax, and Customs Authority (ZATCA) announced the extension of the “Cancellation of Fines and Exemption of Financial Penalties” initiative until 31 December 2026.

The initiative had previously been extended until 30 June 2026 and has been further extended for another 6 months starting 1 July 2026, providing relief to taxpayers who meet the qualifying requirements.

We, therefore, highly encourage taxpayers to take advantage of the initiative and the most recent extension by meeting ZATCA’s compliance requirements within the specified timeframes. We provide a summary of the initiative details below.

The initiative is applicable to penalties relating to corporate income tax (CIT), withholding tax (WHT), value-added tax (VAT), excise tax, and real estate transaction tax (RETT).

The initiative applies to unpaid fines relating to:

• Late registration with ZATCA
• Late payment of tax liabilities
• Late filing of tax returns
• Corrections in VAT returns

The amnesty also applies to reassessments made by ZATCA provided the underlying return falls within the scope of the initiative and the taxpayer pays the due tax or obtains an approved installment plan before the initiative deadline.

The following fines are excluded from the initiative:

• Fines stipulated in Article (45) of the VAT Law
• Fines paid before the effective date of the amnesty initiative
• Fines resulting from “tax evasion” violations, including late registration, delay in payment of taxes, late filing of returns, and amendments in tax returns
• Fines associated with tax returns due after 30 June 2026

It is important to highlight that if the initiative is extended beyond 31 December 2026, any subsequent extension will exclude penalties associated with tax returns due after 30 June 2026.

To benefit from the initiative, the following conditions are required to be met:

• Registration with ZATCA
• Submission of due tax returns
• The payment of due tax liabilities or applying for an installment plan with ZATCA

Note:

Taxpayers have the right to pay the due taxes according to an installment plan submitted before the expiry of the initiative, subject to the plan’s approval by ZATCA. Taxpayers may also benefit from a waiver of late payment penalties for the installments due after 31 December 2026 as per the approved installment plan. In the event of cancellation of the installment plan due to non-compliance, ZATCA may recalculate all fines relating to the unpaid amounts as of the original payment due date.

The extension of the amnesty provides taxpayers with an opportunity to ensure compliance with tax laws and regulations.

Our tax team is available to support your business in the below activities to avail the benefits of this amnesty.

• Review and submit any overdue tax returns, including CIT, WHT, VAT and any related forms such as DFCT.
• Perform a health check review of submitted tax returns.
• Review assessments raised by ZATCA to evaluate potential benefits from availing the initiative.
• Assist in any tax registration with ZATCA.
• Assist in requesting an installment plan with ZATCA.

ZATCA has released an announcement of the extension, and the updated simplified guide is available in Arabic and English.

For any additional information concerning this alert, please contact our tax team as follows: