Tax consulting in the Kingdom of Saudi Arabia for companies is a necessity to avoid tax violations and the resulting penalties, as the use of specialists in the field of taxation would reduce the tax risks to which companies are exposed, in addition to improving their financial performance, which we will explain in detail in this article.

The importance of tax consulting in Saudi Arabia for businesses

Tax consulting companies are of great importance to every establishment on Saudi territory, as adhering to the provisions of tax regulations and not violating them leads to the success and prosperity of this establishment, and the importance of tax consulting in the Kingdom of Saudi Arabia is due to many reasons, and we mention some of them:

1- Avoid tax evasion

Tax evasion is the intentional evasion of the payment of the tax due by providing false or incorrect information, documents, declarations or records. It is also considered tax evasion to bring goods into or out of the Kingdom without paying the tax due in whole or in part or in violation of the prohibition and restriction provisions stipulated in the Saudi regulations, according to the text of Article 39 of the Saudi Regulations. Value Added Tax System.

Therefore, tax consulting in Saudi Arabia is a necessity to avoid taxpayers from being penalized for tax evasion.

Penalties for tax evasion

The Saudi regulator stipulated penalties for tax evasion in the VAT system, including:

• A fine of not less than the value of the tax due, and not more than 3 times the value of the goods or services subject to tax evasion.
• A fine of 10,000 riyals for each taxpayer who fails to submit a registration application within the period specified in the regulation.
• A fine equal to 50% of the difference between the tax due and calculated, in case of filing a false tax return, amending a tax return after filing it, or submitting any documents to the Authority that resulted in calculating the tax value less than the due amount.
• Any person who fails to file a tax return within the period specified by the regulation shall be punished with a fine of not less than 5% and not more than 25% of the value of the tax due that the taxpayer should have declared.
• The penalty is a fine of not more than 50,000 riyals for anyone who withholds tax invoices, records or accounting documents during the period stipulated by the regulation.

2- Notifying the entity of the latest developments in tax regulations

Tax consultancy firms in Saudi Arabia are always up to date with the latest developments in all tax laws and their implementing regulations, thus informing the entity of these developments and how to benefit from them or avoid being exposed to violations of their provisions.

3- Utilizing tax incentives and exemptions

Tax regulations need to be interpreted by specialists in the field of taxation, to know the incentives and exemptions that the facility can benefit from, so it is necessary to resort to one of the companies specialized in the field of tax consultancy in Saudi Arabia, to work to maximize the benefit of the facility from these regulations.

4- Saving time and effort

The use of specialists in the field of taxation saves the organization the time and effort spent on doing all tax-related work, in addition to the quality and accuracy of the work provided by the specialists, because it is the result of experience and experience in doing it.

Areas of tax consulting in Saudi Arabia

There are many areas in which it is necessary to use tax consulting companies in Saudi Arabia to obtain, and the most important of these areas are:

1- Preparing a tax return

It is a statement that contains the taxable business during a specific period of time that the taxpayer is obligated to submit on a specific date, and this data must be correct and not misleading, otherwise the taxpayer will be exposed to the penalty of tax evasion, so the tax return must be submitted through companies specialized in providing tax consultations in the Kingdom of Saudi Arabia, to ensure its integrity and not expose the taxpayer to any penalties.

2- Tax Consulting in Litigation

Through specialized and accredited tax consultancy firms in Saudi Arabia, you can get specialized tax advice in the field of litigation in case you are exposed to any penalties resulting from tax evasion or to avoid being exposed to them.

3- Designing accounting systems

Tax consulting companies in Saudi Arabia design accounting systems, books, records and documentary cycles according to Saudi regulations and the latest developments, making it easier for the auditor during the tax examination, and minimizing disputes between enterprises and the Zakat, Tax and Customs Authority.

4. Reducing the entity’s tax liabilities

When committing to pay the imposed taxes on time, filing tax returns correctly and without delay, in addition to preparing cash flow tables, all of this leads to reducing the tax liabilities of the establishment legally and legitimately, so the use of specialists in the field of tax consultancy in Saudi Arabia for companies is very important for the benefit of the establishment and avoids exposure to any systemic violations.

General Authority for Zakat, Tax and Customs

General Authority for Zakat and Customs Taxation The Authority is responsible for collecting taxes in the Kingdom of Saudi Arabia, and through its online portal, it provides the following tax services:

1- Value Added Tax (VAT)

It is a tax to which everyone who practices an independent economic activity in the Kingdom to generate income, and has been registered for VAT purposes or has been obligated to register in accordance with the VAT Law and its executive regulations, and this service on the Authority’s website includes many services related to VAT, such as:

• VAT registration for establishments.
• Filing a VAT return.
• Pay VAT.
• Amending the VAT return.

and other services provided by the Zakat, Tax and Customs Authority, and below is an explanation of how to register for the tax and how to file a tax return on the Authority’s website.

How to register for tax

The Zakat, Tax and Customs Authority portal provides a VAT registration service for establishments, and after completing the registration, an account number is assigned for this tax, and to benefit from this service, the following steps must be followed:

• Log in to the Authority’s website.
• Choosing public services.
• Click on VAT Registration.
• Enter the required data in the registration form.
• You will receive a notification of your VAT certificate if your application is complete.

Or you can utilize this service by directly clicking on “Access the service” via VAT Registration (Establishments) on the Authority’s website.

Filing a VAT return on the KDIPA website

VAT taxpayers must submit their tax returns that include all their taxable transactions, and taxpayers can submit a VAT return either through tax consulting companies in the Kingdom of Saudi Arabia, or through the Authority’s website or mobile application, and to obtain the service through the website, the following steps must be followed:

• Log in to the Authority’s online portal.
• Select Indirect Taxes and then VAT.
• Moving on to tax returns.
• Identify the declaration to be filed.
• Submit the VAT declaration form.
• The sales that are subject to the basic tax rate are then determined, followed by the purchases that are subject to the same rate.
• Submit the declaration request, then receive an acknowledgment of receipt of the declaration and the invoice amount via SMS and email.

You can also access the service directly by clicking on “Access the service” from the Submitting a VAT return on the Authority’s website.

2- Income tax on foreign enterprises

It is a tax that is levied on:

• Natural or legal persons conducting activities in the Kingdom of Saudi Arabia.
• Non-residents who generate income from sources located in the Kingdom.
• Anyone involved in the production of oil and hydrocarbons.
• Resident fund companies on the shares of non-Saudi partners.

It is worth noting that once the establishment is registered with the Ministry of Commerce, a unique number is created for it, after which the taxpayer must enter the CITC portal to complete the initial registration, and immediately after that, the registration is automatically enrolled in the services related to income tax on foreign establishments. Some of the services related to this tax on the Authority’s website include:

• Paying income tax on foreign enterprises.
• Register for tax.
• File an income tax return.
• Amending the income tax return.
• Objection to revaluation (zakat).

The following is a description of how to register for the tax and how to file the tax return on the Zakat, Tax and Customs Authority website.

How to register for income tax

Registration for income tax is done by following the following:

• Complete registration with the Ministry of Commerce.
• Receive registration data.
• Register on the Authority’s website.
• Complete the necessary requirements.
• You will receive a message to complete the application on your mobile phone or email.

You can also apply directly by clicking on “Login to Service” on the Income Tax Registration on the site.

How to file an income tax return for foreign entities

The Authority provides through its website the service of filing a tax return for income tax on foreign enterprises for a specific fiscal period, and this service is obtained by following the following:

• Log in to the Authority’s online portal.
• Selection of declarations.
• Enter the entity’s financial statements in the return and then file it.
• You will then receive notification of the bill via SMS and email.

You can also apply directly to the service by clicking on “Access the service” on the Filing an income tax returnor use one of the companies specialized in the field of tax consultancy in the Kingdom of Saudi Arabia to ensure that the tax return is filed correctly and does not violate Saudi regulations.

3- Excise Tax

Excise tax is a type of tax that is imposed on goods that may negatively affect public health or the environment in varying proportions, such as carbonated drinks, energy drinks, sweetened drinks, smoking devices and electronic devices, liquids used in these devices and the like, tobacco and its derivatives, and from the services on the Zakat, Tax and Customs Authority website related to excise tax:

• Register for Excise Tax.
• Revoke the license of a tax warehouse.
• Paying the excise tax.
• Filing an excise tax return.

and other services on the website related to the Excise Tax, and below is an explanation of how to apply for this tax and submit your tax return.

Excise Tax Registration

Registration for the excise tax is done by following the steps below:

• Enter the Zakat, Tax and Customs Authority website.
• Choose to register for Excise Tax.
• Submit the application and enter the required data.
• A notification will be sent if the application is complete.

This service can also be utilized by directly clicking on “Access the service” from the Excise Tax Registration on the website, or by consulting one of the offices specialized in the field of tax consultancy in Saudi Arabia.

Filing of Excise Tax Return

The Zakat, Tax and Customs Authority (ZTA) provides for the submission of the Excise Tax return through its website, by following the steps below:

• Log in to the Authority’s website.
• Selecting an excise tax.
• Click on Declarations.
• Enter the entity’s financial statements in the return and then file it.
• You will receive notification of the invoice amount via mobile messages and email.

The service can also be utilized directly by clicking on “Access the service” on the Submitting an Excise Tax Returnor through one of the specialists in the field of tax consultancy in the Kingdom of Saudi Arabia.

4. Withholding tax

It is a tax that is levied on the amounts paid to non-residents by a person residing in the Kingdom of Saudi Arabia according to the applicable rates, and the Zakat, Tax and Customs Authority e-portal provides the service of submitting tax returns for the amounts withheld by following the following:

• Log in to the Authority’s website.
• Go to Declarations and then select View Declarations and then select Monthly Withholding Tax.
• Create the resolution to be submitted “New Monthly Withholding Tax Return”.
• Submit the acknowledgment form, a copy of the tax return, and the invoice.
• You will receive an acknowledgment of receipt and a copy of your tax return and invoice.

The tax return can also be submitted by clicking on “Access the service” on the Filing a Withholding Tax Return on the Authority’s website.

5. Real estate transaction tax

The Authority provides through its website the service of registering real estate transactions in the real estate transaction tax before documenting the contract or completing the emptying process, and this service provides knowledge of whether the real estate transaction is subject to tax or not, with the possibility of issuing a payment invoice for the value of the tax due, and to obtain the service, the following steps must be followed:

• Log in to your account.
• Determine the specific nature of the disposer.
• Choose a documentation path.
• Enter data about the property and its type.
• Enter all the details about the transaction and its real estate value.

It can be accessed directly on the Request to register a real estate transaction on KDIPA’s website and click on “Access the service” to benefit from this service.

Reasons to use tax consulting in Saudi Arabia

Organizations turn to companies specialized in the field of tax consultancy in Saudi Arabia for the following reasons:

• The ambiguity of some provisions of the tax regulations and the need for their proper interpretation by a tax specialist, as their incorrect interpretation may result in exposing the establishment to statutory violations and accusing it of using fraudulent methods to evade the payment of the taxes due.
• Representing organizations before the Zakat, Tax and Customs Authority and judicial authorities in case of tax disputes.
• Assisting organizations in making decisions regarding the direction of investments and the possibility of expansion.
• Providing the advantage of knowing the impact of following certain financial or accounting policies and their effects on tax burdens and liabilities, for organizations to choose what is appropriate for them.
• Making adjustments to the financial statements and developing them in accordance with tax regulations and their developments.
• Lack of sufficient expertise in the financial departments of enterprises to deal with various tax issues, or to deal with the Zakat, Tax and Customs Authority or the judiciary in the event of tax disputes.

In conclusion, tax consulting in Saudi Arabia is a service provided by specialized companies to provide the necessary assistance to understand and apply the tax system, so it is important to use those with experience in this field, and Invest Global is the ideal choice due to its more than fifteen years of experience in the field of tax and legal consulting.

Sources

• Tax advisory framework.
• Zakat, Tax and Customs Authority.
• Tax consulting: Its scientific origins, practical applications and performance standards.