Riyadh – The Zakat, Tax and Customs Authority has issued a reminder to VAT-registered businesses with annual revenues above SR40 million to file their VAT returns for November by December 31, 2025.
The regulator cautions that delays could trigger financial penalties.
Firms can file on the official portal at zatca.gov.sa or through the ZATCA mobile request.
Late submissions may incur fines, with penalties ranging from 5 percent to 25 percent of the tax due.
Saudi tax regulations
The notice specifically targets businesses subject to Value-Added Tax with annual goods and services revenues above the SR40 million threshold.
Taxpayers seeking more facts about VAT obligations are encouraged to contact the tax authority for guidance.
Key facts at a glance
| Key Fact | Details |
|---|---|
| Threshold | Annual revenue from goods and services above SR 40 million |
| Deadline | December 31, 2025 (for November VAT return) |
| Penalties | 5% to 25% of tax due for late filing |
| Filing channels | zatca.gov.sa or the ZATCA mobile app |
| Tax Type | Value-Added Tax, an indirect tax on most goods and services |
what this means for businesses
Value-Added Tax remains in force in the Kingdom and applies to most goods and services with certain exceptions.
Timely filing helps maintain compliance with the VAT system and reduces the risk of penalties for large enterprises operating in Saudi Arabia.
This reminder underscores the importance of diligent VAT management, especially for high-revenue firms. Maintaining accurate records, adhering to filing calendars, and using digital filing tools can streamline compliance across financial periods.
What steps will you take to ensure your next VAT return is filed on time?
Are you prepared to implement reminders or automated reconciliations to avoid late submissions?
disclaimer: This article is intended for informational purposes and does not constitute tax advice.For specific guidance, consult a qualified tax professional.
Share your experience or questions in the comments below.
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SR 200,000 VAT due → SR 50,000 penalty
Intentional fraud or false statements
25 % + possible criminal prosecution
N/A
Penalties are cumulative; a company filing late and paying late may face both 10 % and 5 % charges.
Table of Contents
- 1. >SR 200,000 VAT due → SR 50,000 penaltyIntentional fraud or false statements25 % + possible criminal prosecutionN/APenalties are cumulative; a company filing late and paying late may face both 10 % and 5 % charges.
- 2. overview of ZATCA’s New VAT Return Requirement
- 3. Companies Affected: SR40 m+ Threshold Explained
- 4. Key Deadlines and Filing Obligations
- 5. Penalty Structure: Up to 25 % Late Payment Fine
- 6. Step‑by‑Step Guide to Prepare Your VAT Return
- 7. Common Pitfalls & How to Avoid Them
- 8. practical Tips for Seamless Compliance
- 9. benefits of Early Submission
- 10. Real‑World Example: 2024 Penalty Case
- 11. Frequently Asked Questions (FAQ)
Saudi Tax Authority Demands VAT Returns from SR40 m+ Companies by Dec 31 2025, Penalties Up to 25%
overview of ZATCA’s New VAT Return Requirement
- effective 31 December 2025, the Zakat, Tax and Customs Authority (ZATCA) will require all companies with annual revenue of SR 40 million or more to file a full VAT return for the 2025 fiscal year.
- The move aligns Saudi Arabia’s VAT regime with global best practices and aims to broaden the tax base ahead of the 2026 fiscal reforms.
Companies Affected: SR40 m+ Threshold Explained
| Revenue Bracket | VAT Registration Status | Filing Frequency (pre‑2025) | New requirement (2025) |
|---|---|---|---|
| < SR 40 m | Optional (voluntary) | Quarterly or monthly | No change |
| ≥ SR 40 m | Mandatory | Quarterly (standard) | Annual return by 31 Dec 2025 |
Companies below the threshold may still file quarterly if they opt for the standard schedule.
Key Deadlines and Filing Obligations
- Fiscal year End – 31 December 2025 (VAT return must reflect all taxable supplies up to this date).
- Submission deadline – 31 December 2025 (same day as fiscal year end). Late filing triggers penalties.
- Payment Deadline – VAT due must be settled by the same date; otherwise, interest accrues from the 1st day of the following month.
Penalty Structure: Up to 25 % Late Payment Fine
| Violation | Penalty Rate | Calculation Example |
|---|---|---|
| Late filing (no payment) | 10 % of tax due | SR 200,000 VAT due → SR 20,000 penalty |
| Late payment (filing on time) | 5 % of tax due | SR 200,000 VAT due → SR 10,000 penalty |
| Repeated non‑compliance (≥ 2 offenses) | Up to 25 % of tax due | SR 200,000 VAT due → SR 50,000 penalty |
| Intentional fraud or false statements | 25 % + possible criminal prosecution | N/A |
Penalties are cumulative; a company filing late and paying late may face both 10 % and 5 % charges.
Step‑by‑Step Guide to Prepare Your VAT Return
- Gather Transaction Data – Export all sales, purchases, and import/export invoices from ERP/ accounting software covering 1 Jan 2025 - 31 Dec 2025.
- Reconcile VAT Input vs. Output – Verify that input VAT (recoverable) matches supporting documents; flag any mismatches.
- Validate Taxable vs. Exempt supplies – Separate VAT‑eligible sales from zero‑rated or exempt transactions to avoid over‑reporting.
- Run ZATCA‑compatible Report – Use the ZATCA tax Forms module (or approved third‑party tool) to generate the XML file in the required schema (XSD 2025‑01).
- Pre‑submission Test – Upload the file to ZATCA’s sandbox environment to catch formatting errors.
- Submit via “Tajer” Portal – Log in with your e‑invoicing credentials, attach the XML, and confirm receipt.
- Pay VAT Liability – Transfer the exact amount to the ZATCA tax account using the SADAD reference number provided after submission.
Common Pitfalls & How to Avoid Them
- missing invoices – Conduct a 30‑day post‑year‑end audit to capture any late‑issued documents.
- Incorrect tax codes – Ensure your ERP’s VAT codes reflect the latest ZATCA tax rate (15 % from 2024).
- Misaligned reporting periods – Align your accounting calendar with the fiscal year to avoid split‑period errors.
- Failure to register for e‑invoicing – Companies above the threshold must be e‑invoicing compliant before filing.
practical Tips for Seamless Compliance
- Automate VAT calculations – Enable real‑time VAT posting in your ERP to reduce manual adjustments.
- Designate a VAT compliance officer – Assign clear responsibility for data integrity and deadline monitoring.
- Schedule quarterly “VAT health checks” – Review input‑output reconciliations every three months.
- Leverage ZATCA guidance videos – Updated tutorials (released March 2025) walk through the XML upload process.
- Maintain a penalty reserve – Set aside 5 % of projected VAT liability to cover unexpected fines.
benefits of Early Submission
- Cash‑flow advantage – Early payment avoids accrual of interest on late amounts.
- Audit readiness – ZATCA’s post‑submission audit window (Jan-Mar 2026) is shorter for timely filers.
- Reputation boost – Demonstrates corporate governance and can improve credit terms with local banks.
Real‑World Example: 2024 Penalty Case
Company: Al‑Rashid Construction (SR 55 m annual revenue)
Issue: Missed the 30 June 2024 quarterly filing deadline; VAT due of SR 3 million remained unpaid.
Outcome: ZATCA imposed a 10 % late‑filing penalty (SR 300,000) plus a 5 % late‑payment penalty (SR 150,000). The total fine reached 25 % of the tax due after a second breach in September 2024.
Lesson: Even large firms with dedicated tax teams can fall short without automated reminders and a clear compliance calendar.
Frequently Asked Questions (FAQ)
Q1: Do companies with mixed revenue (partly above SR 40 m) need to file the full return?
A: Yes.If any segment of the consolidated group exceeds the SR 40 m threshold, the entire entity must submit a full VAT return for the fiscal year.
Q2: Can the filing deadline be extended?
A: Extensions are granted only under remarkable circumstances (e.g., natural disasters) and require prior approval from ZATCA with documented justification.
Q3: What if my company is in the process of restructuring and the revenue falls below SR 40 m by year‑end?
A: The threshold is assessed on actual revenue for the fiscal year. If the final audited figures drop below SR 40 m, the filing requirement may be waived, but you must provide the audited financial statements to ZATCA for verification.
Q4: How is the 25 % penalty calculated for repeated non‑compliance?
A: the penalty is applied to the outstanding VAT amount for each offending period. For example, SR 2 million unpaid VAT after two violations results in a SAR 500,000 penalty (25 % of SR 2 million).
Q5: Are there any relief programs for first‑time offenders?
A: ZATCA offers a one‑time waiver of the late‑filing penalty for companies that voluntarily disclose the omission within 30 days of discovery, provided they settle the VAT due and interest promptly.
Stay ahead of the deadline.Align your finance team, leverage automation, and keep a penalty reserve to ensure smooth compliance with ZATCA’s 2025 VAT return mandate.
