What is the Fine Cancellation and Financial Penalty Exemption Initiative?
This initiative, announced by ZATCA, aims to alleviate the financial impact on organizations due to the consequences of the COVID-19 pandemic. The initiative will last for six months only, starting from 1/1/2025 to 30/6/2025.
Key Exemptions Related To E-Invoicing
1. Exemption from unpaid financial penalties, including fines for the delay in registering for any tax system.
2. Exemption from field inspection violations, related to VAT and E-invoicing, as specified in Article 45 of the VAT Law.
What Are The Conditions for the Exemption?
1. Registering in the applicable tax system for non-registered taxpayers.
(For taxpayers subject to E-invoicing, this includes registering with the FATOORA platform by ZATCA.)
2. The initiative is valid for six months, starting from 1/1/2025.
What is NOT Covered By The Initiative?
1. Any fines paid before the initiative’s effective date.
2. Fines related to tax returns due after 31/12/2024.
3. Penalties associated with tax evasion violations.
Conditions For E-Invoicing Taxpayer Exemptions
According to ZATCA’s announcement:
“A taxpayer is exempt from unpaid financial penalties resulting from VAT and E-invoicing field inspection violations, as stated in Article 45 of the VAT Law, if the fines were imposed before January 1, 2025. The exemption is conditional upon submitting all required tax returns and either fully paying the principal tax amount due or requesting an installment plan from ZATCA and adhering to the approved payment schedule. The initiative will remain in effect until June 30, 2025.”
What Field Inspection Violations Are Covered?
1. Standard VAT violations.
2. VAT violations related to E-invoicing regulations.
What Are Standard VAT Violations?
1. Failure to include all required elements in a tax invoice or related debit/credit notes.
2. Failure to issue a tax invoice.
3. Failure to issue or provide debit/credit notes to customers.
4. Failure to retain invoices, records, and accounting documents for the required period.
5. Incorrect calculation of due tax.
6. Obstructing ZATCA officials from performing their duties.
7. Violating any other provision of the VAT Law or its regulations.
What Are E-Invoicing-Specific VAT Violations?
- Failure to issue and store invoices and related notes electronically.
- Failure to store E-invoices and related notes in the required format.
- Failure to include a QR code on an E-invoice.
- Failure to notify ZATCA of any system issues that hinder E-invoice issuance.
- Deleting or modifying issued E-invoices or related notes after issuance.
- Using prohibited functionalities in the E-invoicing system used for invoice issuance and storage.
- Violating any other provisions of the E-Invoicing Regulations and related executive decisions.
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