Saudi Arabia extends tax waiver until end of 2026

Saudi Arabia’s tax authority has extended its fine and penalty waiver scheme for an additional six months, effective from July 1.

The extension will run until December 31, offering exemptions from penalties for late registration, payment and filing under all tax laws, the Zakat, Tax and Customs Authority (Zatca) said in a statement.

The scheme applies to taxpayers registered with Zatca and who have submitted all outstanding tax returns. However, it excludes penalties for tax evasion and fines imposed under Article 45 of the value-added tax (VAT) law.

The waiver was originally introduced in 2020 to alleviate financial strain on businesses during the Covid-19 pandemic and was reintroduced in 2022 to increase tax compliance. It has been extended every six months since then.

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Zatca said the waiver scheme may be extended beyond December 31, 2026, but will not cover fines associated with any return due for submission after June 30, 2026.

The government has been pushing to simplify taxation, broaden the tax base and increase compliance in support of its Vision 2030 goals. In 2020, the kingdom imposed 15 percent VAT, the highest among all GCC countries.

The total tax collection rose more than 2 percent to nearly SAR90 billion ($24 billion) in the first quarter of 2026, according to the finance ministry’s budget statement.