ZATCA has extended its initiative to cancel fines and exempt financial penalties for taxpayers across all tax regimes. Approved by the Minister of Finance, the extension runs for six months, from 1 January 2026 to 30 June 2026, and covers penalties such as late registration, late payment and late returns across VAT, withholding tax, excise, corporate income tax and real estate transaction tax.
Key takeaways
- The initiative cancels fines and exempts financial penalties for taxpayers under all tax regulations, and the extension runs from 1 January 2026 to 30 June 2026.
- Covered penalties include late registration, late payment of taxes, late submission of returns, VAT return-correction penalties, e-invoicing field-control fines and other general VAT penalties.
- The taxes within scope are VAT, withholding tax, excise tax, corporate income tax and real estate transaction tax (RETT).
- It does not cover tax-evasion fines, penalties already paid before the initiative's effective date, or penalties on returns due after 31 December 2025.
- To benefit, a taxpayer must register, file all outstanding returns, correct undeclared taxes, and either pay the principal in full or agree and keep to a ZATCA-approved instalment plan, all by 30 June 2026.
What the fines cancellation initiative covers
The initiative is a broad penalty-relief measure rather than a tax cut: the tax principal remains due, but the fines attached to being late or non-compliant can be cancelled. On the registration and filing side, it reaches late registration in any tax system, late payment of taxes, and delays in submitting returns across all systems. On the VAT side it also covers return-correction penalties, fines from field-control violations tied to electronic invoicing, and other general VAT penalties. The range of taxes is wide, spanning VAT, withholding tax, excise, corporate income tax and RETT, which means most taxpayers with a historic exposure can find some relief here.
The e-invoicing coverage is particularly useful given how many penalties arise from that regime. It extends to failures such as not issuing compliant tax invoices, not issuing credit or debit notes, miscalculating VAT, or not keeping records for the required period, as well as e-invoicing-specific breaches like failing to include the QR code, not notifying ZATCA of a system malfunction, or altering invoices after issuance. Groups working through their VAT and e-invoicing obligations should map their historic penalties against this list.
What is excluded
The initiative excludes three things: fines related to tax-evasion violations, fines already paid before its effective date, and penalties on returns due to ZATCA after 31 December 2025. Relief is otherwise generous, so these carve-outs are where taxpayers get caught out.
The exclusion for returns due after 31 December 2025 matters most in practice: the initiative is aimed at clearing historic exposure, not at waiving penalties on obligations that fall due during the window itself. Fines already settled before the initiative took effect are also gone for good, and anything characterised as tax evasion is off the table entirely.
How to qualify, and instalment plans
Relief is not automatic. To benefit, you must complete every required step by 30 June 2026: register in all systems, file all outstanding returns, correct any undeclared amounts, and either pay the principal in full or enter an approved instalment plan and keep to it.
The conditions form a checklist, and every item must be done by 30 June 2026.
- Register with ZATCA in every system where registration is required.
- Submit all outstanding returns.
- Correct any previously undeclared taxes.
- Settle the resulting principal, either in full or through a ZATCA-approved instalment plan complied with to completion.
The instalment route is the pressure valve where cash flow is tight. The taxpayer submits an instalment request during the initiative period, ZATCA reviews and approves it to confirm eligibility, and payments are then scheduled under ZATCA's procedures. There is a real benefit to staying disciplined: late-payment fines on instalments falling due after 30 June 2026 are exempt, provided the approved plan is fully complied with and not cancelled. If the plan is cancelled for non-compliance, however, all fines are recalculated and imposed based on the original due date, which can undo the entire benefit. In practice, SBC advisers see the instalment plan itself decide the outcome: one missed instalment reinstates every original fine, so we build the schedule into the client's cash-flow calendar from day one.
Frequently asked questions
What is the ZATCA fines cancellation initiative?
The ZATCA fines cancellation initiative is a penalty-relief measure, approved by the Minister of Finance, that cancels fines and exempts financial penalties for taxpayers across all tax regulations. The current extension runs from 1 January 2026 to 30 June 2026 and covers penalties such as late registration, late payment and late returns.
Which taxes does the initiative cover?
The initiative applies across VAT, withholding tax, excise tax, corporate income tax and real estate transaction tax. It covers a range of penalties, including late registration, late payment, late returns, VAT return-correction penalties and certain e-invoicing violations.
What is excluded from the ZATCA initiative?
Tax-evasion fines are excluded, along with penalties already paid before the initiative's effective date and penalties arising from returns that must be submitted to ZATCA after 31 December 2025. The tax principal itself always remains payable.
How can a taxpayer benefit from the initiative?
By registering in all required systems, filing every outstanding return, correcting any undeclared taxes, and either paying the principal in full or agreeing and complying with a ZATCA-approved instalment plan, with all steps completed by 30 June 2026.
How SBC Tax Consulting can help
SBC helps taxpayers make the most of the window before 30 June 2026: reviewing historic exposure across VAT and corporate tax, bringing registrations and returns up to date, correcting past filings, and structuring an instalment request where full payment is not practical. We also strengthen e-invoicing and tax automation controls so the same penalties do not recur. To act before the deadline, contact our team.
This publication is for general information only and does not constitute professional advice. Please consult your SBC advisor before acting on any matter covered here.