Saudi Tax Penalty Waiver Extended to End of 2026

Saudi Arabia has extended its initiative to waive fines and financial penalties on tax violations, giving eligible businesses additional time until 31 December 2026 to settle their obligations without incurring late-related penalties.

The initiative was in force from 1 January 2026 to 30 June 2026, and a further ministerial decision extended it for an additional six months, running from 1 July 2026 to 31 December 2026, for taxpayers subject to all tax systems.

The waiver covers penalties linked to corporate income tax, withholding tax, value-added tax (VAT), excise tax, real estate transaction tax and other taxes. It applies to fines for late registration, late payment, late filing of returns, corrections or amendments to VAT returns, and violations identified in field audits, including e-invoicing and VAT compliance issues.

Importantly, the scheme does not waive principal tax amounts. It also excludes any tax evasion violations, penalties already paid before the start of each initiative period, fines imposed under Article 45 of the VAT law, and penalties linked to returns due after 30 June 2026. For the core coverage window, the waiver applies to penalties on returns due before 1 January 2026.

How to qualify

To benefit, a taxpayer must be registered, submit all outstanding tax returns, and pay due liabilities in full — or obtain approval for an installment plan. Accurate disclosures are required, and in disputed cases, litigation must be withdrawn once the principal tax is settled.

Taxpayers may apply to pay due taxes in installments under a plan submitted before the end of the initiative and approved by the authority. Late payment penalties on installments due after 30 June 2026 can still be waived if the plan is approved within the initiative window. For businesses across Riyadh, Jeddah and beyond, the extension offers a valuable chance to regularize their tax position and avoid additional financial burdens.

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