Saudi Tax Compliance Guide: Zakat, VAT, and RETT

The primary compliance obligations and penalties across Zakat, Value Added Tax (VAT), and Real Estate Transaction Tax (RETT) are summarized below:

Zakat

The Zakat obligations apply primarily to Saudis and GCC nationals and establishments licensed to practice an activity in the Kingdom.

Obligation	Requirements	Penalties for Non-Compliance
Registration	Mandatory registration must be completed before the end of the first fiscal year.	A fine is imposed for delay in registration, with the amount varying based on the taxpayer category (e.g., 1,000 SAR for a Natural Person; 10,000 SAR for a Joint-Stock Company; 5,000 SAR for Other Entities).
Filing/Return	Returns must be filed annually no later than 120 days from the end of the Zakat year. Returns are typically submitted electronically. Some Zakat payers on an estimated basis do not file a return, as Zakat is calculated automatically.	A fine is imposed for delay in filing the tax return, ranging from no less than 5% and no more than 25% of the unpaid tax amount.
Payment	Payment of the due Zakat is required annually, no later than 120 days from the end of the Zakat year.	A fine is imposed for delay in paying the due tax, equal to 5% of the unpaid tax value for each month or a part thereof.

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Value Added Tax (VAT)

VAT is imposed on any person or establishment engaged in a business activity to generate income.

Obligation	Requirements	Penalties for Non-Compliance
Registration	Mandatory registration is required for revenues exceeding 375,000 SAR within twelve months. Voluntary registration is possible for revenues between 187,500 SAR and 375,000 SAR.	A fine of 10,000 SAR is applied for failure to register during the set period.
Filing/Return	Returns must be filed on a Monthly Basis (for revenues > 40,000,000 SAR) or Quarterly Basis (for revenues < 40,000,000 SAR). Returns must be filed no later than the last day of the month following the end of the tax period.	A fine is imposed for failure to file tax returns, ranging from 5% to 25% of the VAT in respect of which the return should have been filed.
Payment	The due tax must be paid by the filing deadline. Obligation includes paying the tax.	A fine is imposed for failure to pay the due tax, equal to 5% of the value of the tax due for each month or part thereof.
Other Compliance	Requirements include the activation of E-invoicing solutions, compliance with VAT law and regulations, and keeping tax invoices and accounting records in Arabic.	Fines apply for various failures, including: Failure to generate e-invoices (no less than 10,000 SAR and no more than the value of the due tax). Filing incorrect tax returns (50% of the difference between calculated and due tax). Failure to keep books/records (up to 50,000 SAR).

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Real Estate Transaction Tax (RETT)

RETT is imposed on all transactions that result in the transfer of property ownership, or its possession for the purpose of owning or benefiting from it. The tax rate is 5% of the total sale price.

Obligation	Requirements	Penalties for Non-Compliance
Registration	The transaction must be registered on ZATCA’s Real Estate Transaction Platform before completing the transfer at the Ministry of Justice. There is no minimum threshold for RETT.	A fine for violating a provision of the Implementing Regulations is no less than 10,000 SAR and no more than the value of the tax due.
Filing/Return	There is no return required.	N/A
Payment	The tax must be paid by the disposer (seller) in or before the transfer with the Ministry of Justice.	Delay in paying the due tax: A fine of 1% of the unpaid tax amount for each (30) days of delay. Tax Evasion (e.g., providing incorrect value): A financial fine of not less than the amount of tax due and not exceeding three times its value.