Saudi Arabia extends VAT penalties relief until the end of 2025

Originally introduced to support taxpayers in their efforts to comply with VAT and e-invoicing obligations, the grace period offers relief from penalties for eligible businesses. The extension applies from 1 July 2025 to 31 December 2025.

To benefit from the extended amnesty, taxpayers must:

• Be registered for VAT or relevant taxes under Saudi regulations
• File any outstanding VAT returns by the deadline
• Pay the full amount of principal tax due on those returns

Taxpayers are also encouraged to explore instalment options where needed.

Not all violations are covered by the relief. ZATCA has specified that the following will remain subject to penalties:

• Tax evasion violations
• Penalties paid before the start of the grace period
• Late submissions for VAT returns filed after 30 June 2025

ZATCA’s continued pragmatism presents an opportunity for VAT-registered businesses — particularly those adjusting to Saudi Arabia’s phased e-invoicing rollout — to bring their filings up to date without facing financial penalties.

However, the clock is ticking. Businesses with outstanding VAT returns or noncompliant e-invoicing practices should act swiftly to meet the grace period’s conditions. 

Avalara offers support for Saudi VAT compliance and Fatoorah e-invoicing, including:

• Phase 2 integration with ZATCA
• Production of both XML and PDF A/3 e-invoices

Speak with Avalara today about your international VAT compliance challenges.