ZATCA wishes to raise an additional tax assessment against a company for a taxable year for which the company duly filed its tax declaration on time. Under the Saudi Income Tax Law's assessment time limits, by when must ZATCA generally do so, and how does this change if the company never filed a declaration for that year at all?
- Generally within five years from the end of the filing deadline for that taxable year's declaration; this extends to ten years from that same deadline if the company never filed a declaration for the year, or filed one that was incomplete or incorrect with intent to evade tax
- Generally within ten years from the end of the filing deadline; this shortens to five years if the company never filed a declaration, since ZATCA is expected to act faster once it discovers a complete absence of filing
- A flat three years applies in every case, whether or not the company filed, with no extension for non-filing or evasion
- There is no fixed time limit at all; ZATCA may raise or amend an assessment for any past taxable year at any time it discovers a shortfall
Why A? And why not the others?
Correct answer: A. Generally within five years from the end of the filing deadline for that taxable year's declaration; this extends to ten years from that same deadline if the company never filed a declaration for the year, or filed one that was incomplete or incorrect with intent to evade tax
ZATCA may generally make or amend a tax assessment within five years from the end of the deadline specified for filing that taxable year's declaration, but this period extends to ten years from the same deadline where the company never filed a declaration for the year, or filed one that was incomplete or incorrect with the intent of evading tax, giving the authority materially longer to act against non-compliant or fraudulent filers. The option that shortens the period to five years upon non-filing and lengthens it to ten years for filed returns has the logic backwards: a taxpayer who conceals its position by not filing at all, or by filing incorrectly with evasive intent, is given a longer period of exposure, not a shorter one, than a taxpayer who filed properly on time. The option describing a flat three-year period in every case is wrong because that figure belongs to a separate reform proposal that has not replaced the current five-year and ten-year limits. The option claiming there is no fixed time limit at all is wrong because the law sets explicit, bounded periods rather than leaving ZATCA free to assess indefinitely.
Source: Saudi Income Tax Law (Royal Decree No. M/1 of 1425H) and its Implementing Regulations, tax assessment limitation-period provisions