16-Dec-2021 type of violations penalties fines relatedksa e-invoice ksa vat ksa e-invoicing penalties saudi arabia e-invoice vat penaties ksa e-invoice voilations
E-Invoice is applicable in Kingdom of Saudi Arabia from 4th December 2021 for the 1st Phase.
E-Invoice is applicable in Kingdom of Saudi Arabia from 4th December 2021 for the 1st Phase. In this context, it is very important to follow all the E-Invoicing Regulations and Its Requirements to avoid fines/penalties. In case of non-compliance with E-Invoice Regulations & Its Requirements, heavy amount of penalties shall be levied. In this blog, we tried to clarify the penalty provisions as per VAT Law along with according to its recent announcement dated 16th December 2021.
Type of Violations, Penalties & Fines
As per Article 4 – “Provisions related to Electronic Invoices and Electronic Notes” of E-Invoice Regulations, the provisions related to the fines and penalties stated in chapter (16) of the VAT Law.
Below is the Relevant extract of Article 45 of Chapter 16 of VAT Law:
As per Article 45 of VAT Law, “A fine not exceeding fifty thousand (50,000) riyals shall be imposed on any Person that:
1. has not kept Tax Invoices, books, records and accounting documents for the period set out in the Regulations and the fine shall be per Tax Period.
Further The Zakat, Tax and Customs Authority (ZATCA) has come up with certain clarification with regards to penalties / fines for violation of E-Invoice Regulations & Its requirements on 16th November 2021 and announced the penalties / fines for violation on E-Invoice Regulations for the first phase starting from 4th December 2021. Penalties / fines shall be levied on the Taxpayers who are non-compliant with the E-Invoice Regulations and its requirements.
Below are the penalties / fines for violation as per Announcements read with VAT Penalties mentioned in the VAT Law:
|Sr. No.||Type of Violation||Penalties / Fine (in SAR)|
|1||Not issuing E-Invoices||5,000 to 50,000|
|2||Not adding the QR Code in the simplified tax invoice|
Penalty up to 50,000.
However, initially warning may be issued.
|3||VAT Registration no. of Buyer (Wherever required to be mentioned)|
|4||upon failure to notify the Authority of any malfunction that hinders issuing electronic invoices*|
|5||Deleting or Amending E-Invoices after their issuance||10,000 to 50,000|
*It appears that even if you are facing any challenges (Like system issues, system updation still in process, etc.) in issuing E-Invoice, then in those cases, Taxpayer has to inform to Authority about the same with proper reasoning as to why E-Invoices are yet not issued. In case of failure to notify to the Authority about such instances, then Taxpayer is liable for Penalty.
Announcement can be accessed at Click Here
Further such announcement states that all fines shall be applied according to the type of violation and the number of its repetitions. Therefore, it can be interpreted that first time violation may be done away with a warning or smaller amount of penalties. However, multiple times violations may lead to heavy amount of penalties.
Penalties has been categorised with the type of violations as mentioned above in the table, but it is not cleared by the ZATCA with the said announcement whether such penalties shall be per Invoice violation or per Tax Period.
Further it is important to note that as per E-Invoice Regulations published by GAZT, article for penalties provision has been given but reference has been drawn to refer VAT Law for penalties. As per VAT Law, penalties are for the Tax Period as mentioned in the opening para of this blog.
Based on above discussion, it can be inferred that penalties shall be levied per Tax Period referring Article 45 of VAT Law unless further clarifications are issued by ZATCA.