Every few months a founder sends us a screenshot of their ZATCA account with a number in red that is bigger than the tax itself. The story is nearly always the same. Sales crossed the registration threshold in the second year, nobody was watching, and the first return went in late. Then the second.
If that sounds familiar, the next eight weeks matter. ZATCA's fines waiver initiative has been extended to 31 December 2026, and it can clear most of those penalties.
How the penalties stack up (as of November 2026)
VAT in the Kingdom is 15%. A resident business has to register once its taxable supplies over the last 12 months pass SAR 375,000, or once it expects them to pass that figure in the next 12 months. Voluntary registration is open from SAR 187,500. The application is due within 30 days of the end of the month in which you crossed the line, under the VAT Implementing Regulations.
Most small and mid-sized companies file quarterly. Monthly filing applies once annual taxable supplies go above SAR 40 million. Either way, the return and the payment are due by the end of the month after the period closes.
Here is what ZATCA's own penalties table says happens when you miss those dates:
- Failing to register: SAR 10,000.
- Filing a return late: 5% to 25% of the tax that should have been declared.
- Paying late: 5% of the unpaid tax for each month, or part of a month, it stays unpaid.
That last one is the one that hurts. Take a trading company that owes SAR 80,000 for a quarter and pays it six months late. The late payment fine alone can reach SAR 24,000, before you add anything for the late return. Repeat the same violation within three years and ZATCA can double the fine.
What the waiver covers
The Minister of Finance extended the Cancellation of Fines and Exemption of Financial Penalties Initiative for six months from 1 July 2026, ending 31 December 2026. ZATCA's announcement lists fines for late registration under all tax laws, late payment, late filing, and VAT return corrections.
To qualify you must be registered with ZATCA, submit every outstanding return, and pay the full principal tax. If paying in one go is not realistic, you can apply for an instalment plan, as long as you apply while the initiative is running and then pay every instalment on its date. Miss an instalment and the plan can be cancelled, and the fines come back.
The catch
The waiver only reaches returns that were due on or before 30 June 2026. Anything due after that date is outside it, and ZATCA has said plainly that any further extension will not cover those returns either.
So if your Q2 2026 return was late, it is still inside. Your Q3 return, due at the end of October, is not. Fixing the old periods while letting the new ones slide just builds a fresh pile of fines with no waiver to clear it.
Also excluded: tax evasion penalties, fines under Article 45 of the VAT Law, and fines you already paid.
What we would do this month
Start by pulling the full statement from the ZATCA portal and listing every period with a missing or wrong return. Then reconcile your sales and purchase records for those periods, because a corrected return built on weak numbers just creates the next problem. Our associate firm, Gadwalah CPA, handles the bookkeeping and return preparation side of this work, and FCG advises on sequencing and the instalment request.
Then file, pay or apply for instalments well before mid-December. ZATCA's systems get busy at the end of any amnesty, and "we submitted on the 31st" is not a plan.
If you crossed SAR 375,000 and never registered at all, this is the cheapest moment you will get to put that right.
Not sure where your company stands? Our accounting and bookkeeping service can review your ZATCA position and map out the fix before the deadline. Book a free consultation and we will go through it with you.
