His majesty King Salman Bin Abdulaziz has issued a Royal Order to approve the operating rules of the tax appeal process in Saudi Arabia.
The operating rules set out the key deadlines and actions that taxpayers, and the General Authority of Zakat and Tax (GAZT), are required to adhere to during the course of a tax dispute. These rules cover direct tax and Zakat, as well as indirect taxes.
In this article we have summarised the main rules and appeal processes.
Following the receipt of an assessment or decision from the GAZT, the taxpayer has 60 days to file a formal objection or ‘VAT Review Request’. This is filed online, in Arabic, through the GAZT portal. A VAT Review Request must include the points under dispute, the reasons for objecting to the GAZT decision, and any relevant supporting documents. In addition, the GAZT may require a cash security or bank guarantee from the taxpayer up to a maximum value of the unpaid tax and any associated penalties.
The GAZT must reply to the VAT Review request within 90 days.
If the GAZT’s review is not positive (or is only partly positive) the taxpayer has the right to take the matter further and the options are explained below. It should be noted that if the GAZT does not reply within 90 days, the request will be deemed to have been rejected and an appeal must be made within 30 days of the deemed rejection.
The GAZT has established an Internal Dispute Settlement Committee (the Settlement Committee) to settle disputes as an alternative to making a formal Appeal to the VAT First Instance Committee and the VAT Appeals Committee.
If the taxpayer requests the Settlement Committee to consider its dispute, the committee will inform the taxpayer whether the request is accepted within 30 days. If it is accepted, a meeting will be organised to review the case involving the taxpayer (and their representatives, where applicable) and the GAZT. The decision will be given within 60 days.
The VAT First Instance Committee and the VAT Appeals Committee are the competent judicial authorities to which the taxpayer can file a formal appeal. Both bodies are separate from the GAZT.
The appeal will be heard initially by the VAT First Instance Committee. If the Taxpayer or the GAZT objects to the decision of the VAT First Instance Committee, the dispute will be escalated to the VAT Appeals Committee.
The decision of the VAT Appeals Committee is final and non-contestable before any other judicial body.
All hearings are conducted in Arabic and all documents must be submitted in Arabic.
In the explanations above, we have described a process where the taxpayer passes through each stage of the review process. However, in some cases it will be possible for the appeal to by-pass the Internal Dispute Settlement Committee and move directly to a formal appeal to the VAT First Instance Committee.
The operating rules provide a clear and helpful process for taxpayers. It is essential that taxpayers follow the rules carefully and in particular, that all deadlines are observed. Failure to meet a deadline will result in the case being treated as settled.