ZATCA Zakat or Tax Assessment Objection in Saudi Arabia

A contracting company in Riyadh opens its ZATCA account (the Zakat, Tax and Customs Authority) and finds an amended zakat assessment for 2023. ZATCA refused to deduct customer advances and added SAR 3 million to the zakat base. The extra zakat is SAR 75,000. The accountant wants to go straight to the tax committee. That is where many taxpayers lose their case: the lawsuit does not start at the committee.

The direct answer: there are two stages. First, you file a grievance (tazallum) with ZATCA itself within 60 days from the day after you were notified. ZATCA must decide within 90 days. Second, if ZATCA rejects it, accepts it only in part, or stays silent for 90 days, you have 30 days to file a lawsuit before the first-level circuits of the Zakat, Tax and Customs Committees, or to ask for referral to ZATCA's internal settlement committee. This is Article 5 of the Rules of Work of the Zakat, Tax and Customs Committees (Royal Order No. 25711 dated 8/4/1445H).

Which body decides zakat and tax assessment disputes?

Not the general courts and not the Board of Grievances (the administrative judiciary). Article 67 of the Income Tax Law, as amended by Royal Decree M/113 dated 2/11/1438H, created the Committee for Resolution of Tax Violations and Disputes and the Appellate Committee. Members are appointed by royal order and may not come from bodies that supervise tax work. The same decree made these committees the competent judicial body under the VAT Law.

Today they work under the General Secretariat of the Zakat, Tax and Customs Committees (GSTC). Article 3 of the Rules gives the zakat and tax circuits jurisdiction over violations, disputes and public and private right claims under the zakat and tax laws, and over objections to ZATCA decisions. The Zakat Collection Implementing Regulation 1445H (Article 116) refers to the same Rules.

What they do not hear: a contract dispute between you and a client or partner about who bears the zakat or tax. That goes to the court that is competent for the contract. Customs disputes go to separate customs circuits in the same Secretariat.

What are the deadlines to object to a zakat or tax assessment?

If you miss any stage, ZATCA's decision becomes protected and cannot be challenged before any body (Rules, Article 6). The only exception is when the circuit finds that ZATCA's decision did not meet the legal requirements in the first place. Do not plan your case on that exception.

ZATCA also has time limits to issue the assessment. For zakat, it may assess or re-assess within 5 years from the return deadline, or 10 years if the return was late, incomplete or not filed (Zakat Implementing Regulation, Article 106). For income tax, the period is 5 years, or 10 years if no return was filed or it was incomplete or incorrect with intent to evade (Income Tax Law, Article 65). An assessment issued after these periods should be your first defence.

Do I have to pay before I object?

An objection does not stop your duty to pay the amount you do not dispute (Rules, Article 7). For zakat there is a stricter condition: to be accepted in form, you must pay all zakat on undisputed items and pay at least 10% and not more than 25% of the disputed zakat, or give a financial guarantee for it, under ZATCA's controls (Zakat Implementing Regulation, Article 116(2)).

How do I file and what do I attach?

The first grievance goes to ZATCA through its electronic channels. The lawsuit is filed electronically or in person under the GSTC's requirements (Rules, Article 2). Article 11 lists what the statement of claim must contain:

• The claimant's details; for a company, the commercial registration and address, plus the tax or unified number if any.
• The number, date and result of the grievance filed with ZATCA, and a copy of the contested decision.
• The agent's or legal representative's details, and contact details including a mobile number.
• The subject of the claim, the requests and the supporting documents.
• The date and result of the internal settlement committee decision, if you used it.

Do not combine two objections in one claim. Article 11 requires a separate lawsuit for each objection filed with ZATCA. The strongest files are organised item by item: the item, ZATCA's reason, your answer and the document that proves it (contracts, invoices, bank statements, audited financial statements, working papers).

The company filed its grievance on day 40. ZATCA accepted one item and rejected two, and notified the company 75 days later. The company paid the required percentage on the two items and filed one lawsuit per objection within the next 30 days, attaching customer contracts and collection statements. Had it filed one day after the 30 days, the assessment would have become final.

Is the first-level decision the end?

If the amounts payable in the case do not exceed SAR 50,000, the first-level decision is final (Rules, Article 33). Above that, the losing party, taxpayer or ZATCA, may appeal within 30 days from the day after receiving the decision, through the GSTC electronic system (Article 34). The appellate decision is final and cannot be challenged before any other judicial body (Income Tax Law, Article 67(7)). A petition for reconsideration remains possible in limited cases (Rules, Article 40).

Practical steps for both sides

If you are the taxpayer who received the assessment:

• Record the notification date and count 60 days from the next day.
• Separate accepted items from disputed ones, and pay the accepted part.
• For zakat, prepare 10% to 25% of the disputed amount or a financial guarantee.
• Write your grievance item by item with a document for each item; it becomes the basis of your lawsuit.
• If ZATCA stays silent for 90 days, your 30-day period has started. Do not wait for a reply.

If you are buying shares in a company or joining it as a new partner:

• Ask for the zakat certificate and a list of open assessments and objections for all years still open to assessment.
• Ask about any pending case before the first-level or appellate circuits and its amount.
• Link part of the price, or a seller guarantee, to the outcome of any open assessment.
• State in the contract who bears any assessment for years before the share transfer.

This is general information based on the official Arabic texts of Saudi laws, which prevail over any translation. It is not legal advice for your specific case.

If you received a zakat or tax assessment and want to check your deadlines and grounds before filing, send the assessment letter and your return on WhatsApp and we will review them with you.