ZATCA penalty waiver initiative 2026: what it covers and how to use it before 31 December 2026

The "Cancellation of Fines and Exemption of Financial Penalties" initiative is a ZATCA relief program. ZATCA announced on 29 June 2026 that a Minister of Finance resolution extended it for 6 months, from 1 July 2026 to 31 December 2026. ZATCA's simplified guide says the program began as one of its incentive steps to reduce the financial effect of COVID-19 on businesses.

For a supplier, the idea is simple. Old penalties on late returns or late payments keep growing every month they stay open, and they sit on your ZATCA account while you are trying to keep your papers in order for buyers. The initiative lets you settle the tax you owe and drop most of the penalties on top of it.

The window is short. Everything that matters, the returns, the principal payment or the installment request, has to be done before the end date. ZATCA has not said it will extend the initiative again, so plan as if 31 December 2026 is final.

According to ZATCA, the initiative exempts unpaid fines of four kinds: late registration under all tax laws, late payment, late filing of tax returns, and the penalty for correcting a VAT return. The simplified guide names tax types such as VAT, excise tax, withholding tax and the real estate transaction tax (RETT).

The guide also shows how large these fines can get. In its examples, the late filing fine is up to 25% of the tax that should have been declared, and the late payment fine is 5% of the unpaid tax for each month or part of a month until you pay. On a large quarter, that grows fast.

Late payment fines are covered whether the unpaid amount came from your own disclosure or from a ZATCA reassessment, as long as the return was due before 1 July 2026. A business that was required to register but never did can also benefit, once it registers with ZATCA.

ZATCA lists four exclusions. First, fines for tax evasion, including evasion linked to late payment, late filing, late registration or return amendments. Second, fines under Article 45 of the VAT Law. Third, fines you already paid before the initiative took effect: there is no refund of those. Fourth, fines on any return that was due to ZATCA after 30 June 2026.

The fourth point catches many suppliers. If your quarterly VAT return for a period ending after mid 2026 is late, its fine is not part of this initiative, even though the initiative is still open. The guide adds that if the initiative is extended beyond 31 December 2026, a future extension will also exclude returns due after 30 June 2026.

So the initiative is a clean-up tool for older periods. It does not protect current filings. Keep filing and paying on time from July 2026 onward, and check any fine you are unsure about directly with ZATCA.

ZATCA sets three conditions. You must be registered with ZATCA for the tax concerned. You must submit every return that is still outstanding, or correctly declare any tax you did not declare. And you must pay the full tax principal from those returns, or apply for an installment plan and follow it.

If you cannot pay in one go, the installment route works in four steps, as the guide describes them. You send an installment request to ZATCA during the initiative period. ZATCA's team reviews it to confirm you qualify. Payments are scheduled under ZATCA's installment rules. If ZATCA cancels the plan because you missed installments, it calculates all the fines on the unpaid amounts from the original due date.

The good news in the guide: installments that fall due after 31 December 2026 under an approved plan stay exempt from late payment fines, as long as the plan is kept and not cancelled.

Take a fictional supply company. It missed its VAT return for the fourth quarter of 2025, which was due in January 2026, before the 30 June 2026 cut-off. The VAT on that return is SAR 40,000, and it is now six months late.

Using the fine sizes in ZATCA's guide examples, the late filing fine can reach 25% of SAR 40,000, which is up to SAR 10,000. The late payment fine is 5% of SAR 40,000 for each month, which is SAR 2,000 a month, or SAR 12,000 over six months. Together, that is up to SAR 22,000 of fines on top of the SAR 40,000 tax.

If the company files the return and pays the SAR 40,000 principal before 31 December 2026, or gets an approved installment plan and keeps it, the initiative can exempt those fines. The tax itself is still paid in full. These are example figures only. ZATCA calculates the real fines on your account.

ENTEK has no part in this initiative. It does not file returns, calculate fines, talk to ZATCA for you or approve any certificate. This page is an explainer only, and nothing in it is tax advice. For your own case, check with ZATCA through its unified center on 19993, its website, or a qualified tax adviser.

Where ENTEK can help is the record keeping that sits next to tax work. On ENTEK, a supplier keeps a verified company profile with CR and VAT numbers, certifications, key personnel and official stamp. For orders on ENTEK, you can see what you are owed and when you will be paid, with owed, expected payout, received and ENTEK commission, by store and by order, plus ledger, ageing and statements.

That gives your accountant a clear view of sales on ENTEK when the next return is due. It does not replace your accounting system or your VAT filing.