Tax & Zakat Lawyers
We handle tax and zakat matters, from periodic compliance to challenging assessments.
Overview
Zakat and tax in Saudi Arabia are not purely accounting matters. Disputes with the authority usually turn on legal characterisation: is this supply taxable or exempt? Is this counterparty resident or non-resident? Is the deduction available? Those are legal questions answered by the statutes and treaties, not by the ledger.
We work at three levels: preventive compliance by reviewing transactions before they are executed; dealing with audits and assessments when they arise; and objection and litigation before the tax committees. We also review the tax clauses in contracts, which are a frequent source of disputes between parties after signature.
Timing is decisive: the windows for objecting to an assessment are short, and missing one makes the assessment final even where it is substantively wrong. A client who calls a week after receiving an assessment has far more options than one who calls two months later.
The legal framework
The zakat and tax framework combines several regimes under one collection and audit authority:
- The Zakat, Tax and Customs Authority: audit, assessment and collection
- The VAT Law and its implementing regulations
- The zakat collection regulations and the basis of the zakat base
- The Income Tax Law, non-resident rules and withholding
- Double taxation treaties concluded by the Kingdom
- The General Secretariat of the Tax and Customs Committees and objection procedures
Situations we handle
A disputed zakat or tax assessment
We review the basis of the assessment and the documents, identify the defensible grounds, and file within the statutory period.
Dealing with a non-resident supplier
Withholding on cross-border payments is a recurring source of violations. We establish the correct rate and treaty effect before payment.
A VAT treatment dispute
Correct characterisation of the supply — standard, zero-rated or exempt — determines the whole liability, and an error compounds across many returns.
A field audit
An organised, documented response during the audit reduces the eventual assessment. Improvising at this stage is paid for at the next one.
A tax clause in a new contract
Who bears the tax, the withholding and the penalties — short clauses that prevent an entire dispute after performance.
Costly mistakes we see
- 1
Missing the objection deadline
An assessment becomes final once the period lapses, however wrong it is. This is the single error that most often strips companies of any defence.
- 2
Relying on the accountant alone for a legal question
Characterising a transaction is a legal question. Confusing the two roles produces returns that are arithmetically right and legally wrong.
- 3
Neglecting supporting documents
Deductions and exemptions require compliant documentation. An invoice missing required particulars is rejected even where the transaction is sound.
- 4
Ignoring withholding on foreign payments
The obligation sits with the payer, not the recipient. Discovering it during an audit means the tax and the penalties together.
How the procedure runs, step by step
Objecting to a ZATCA assessment is governed by short, hard deadlines. Missing the deadline extinguishes the right to object however wrong the assessment is on its merits.
- 1
Read the assessment and identify its basis
We separate assessments based on actual figures from deemed assessments, and pin down which tax year, which item and which penalty. Many assessments contain arithmetic errors or time-barred periods that can be struck out immediately.
- 2
Object to the Authority
The objection is filed electronically within the statutory period from notification, supported by accounting documents. An objection without supporting documents is rejected on form and burns the deadline with it.
- 3
Meet the payment or guarantee condition
In defined cases, admissibility of the objection requires payment of a percentage or a bank guarantee. We arrange this in advance, because rejection for failing the condition cannot be cured once the deadline has passed.
- 4
Escalate to the tax committees
If the objection is rejected, the case goes to the first-instance committee for the resolution of tax violations and disputes. The process there is judicial in nature and needs a combined legal and accounting memorandum, not administrative correspondence.
- 5
Appeal, settlement, and forward compliance
The first-instance decision is appealable to the appellate committee within the prescribed period. Once resolved, we rebuild the accounting process that produced the assessment, because a recurring assessment costs more than fixing the internal system once.
Documents we will ask you for
- The assessment letter or notice from the Authority
- Audited financial statements for the assessed years
- The tax or zakat returns as filed
- Ledgers and workings supporting the disputed items
- Contracts and documents for the transactions in issue
- Evidence of the date the assessment was notified
Fees and timelines
Preventive reviews and advice are offered at a fixed fee for a defined scope. Objection and litigation files are priced by stage: assessment review, objection before the authority, then advocacy before the committees, each with a written scope.
On timing: preparing an objection normally takes one to three weeks depending on document volume. Determination of the objection and proceedings before the committees run for months, which is why we advise organising documents during the audit rather than after the assessment issues.
Common questions
What is the difference between zakat and income tax?
Zakat applies to entities owned by Saudi and GCC persons on the zakat base, while income tax applies to the non-GCC ownership share. Mixed entities are subject to both in proportion to ownership, and that split is a common source of error.
How long do we have to object to an assessment?
The period is short, set by the regulations, and runs from notification. Missing it makes the assessment final and unappealable, so the first thing we do on receiving any assessment is fix the statutory date.
When must we register for VAT?
On reaching the mandatory registration threshold of taxable revenue, with voluntary registration available at a lower level. Continuing to trade unregistered after crossing the threshold creates a retrospective liability plus penalties.
Can penalties be reduced?
Initiatives or bases for reduction may be available in defined circumstances, depending on the nature of the violation and when it is remedied. Correcting voluntarily before discovery is always the stronger position.
What are our obligations when paying a foreign supplier?
An obligation to withhold and remit a percentage may arise, with the rate depending on the nature of the payment and any applicable treaty. The liability — and the penalty — sits with the payer.
Will you represent us before the tax committees?
Yes, from preparing the objection and its submissions through advocacy before the first-instance and appellate committees, coordinating with your accountants on the numbers.
What happens in a field audit?
The authority requests documents and explanations for defined periods. An organised, documented response within the deadlines reduces the likelihood and size of an assessment; delay or inconsistency widens it.
Do we need a tax review before a transaction?
Yes. Unsettled zakat and tax exposures effectively pass to the buyer or reduce the price. Diligence before signature costs less than discovery afterwards.
Related services
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Administrative Lawyers
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