The Zakat, Tax and Customs Authority (ZATCA) of Saudi Arabia conducted over 21,000 inspection campaigns across a diverse range of businesses during December 2025, focusing on strengthening tax compliance and combating evasion. These nationwide inspections, spanning retail, contracting, and service sectors, pinpointed common violations related to invoice practices and tax stamp adherence. The initiative underscores the Kingdom’s commitment to fiscal responsibility and a level playing field for all businesses.
Inspection teams visited locations in various regions and cities throughout Saudi Arabia, targeting retail outlets, tobacco shops, contracting companies, and even women’s beauty salons. According to ZATCA’s official spokesperson, Hammoud Al-Harbi, the goal is to enhance tax fairness and curtail illicit commercial activity. These efforts are part of an ongoing strategy to improve revenue collection and ensure adherence to Saudi Arabia’s evolving tax regulations.
Understanding the Recent Tax Compliance Inspections
The extensive inspections carried out by ZATCA signal a heightened focus on enforcement of recent tax reforms within the Kingdom. Saudi Arabia has been steadily modernizing its tax system as part of its Vision 2030 plan, which aims to diversify the economy away from oil dependence. This modernization includes the wider adoption of electronic invoicing systems and stricter rules regarding tax stamp application on specified goods.
Common Violations Identified
The most prevalent issues discovered during December’s campaigns centered around the proper issuance of tax documentation. Specifically, inspectors noted the absence of required tax stamps on goods, a failure to provide debit and credit notes to customers, and instances of businesses not utilizing the mandated electronic tax invoice (e-invoice) system. These violations represent a significant challenge to maintaining accurate tax records and revenue collection.
The non-compliance with e-invoicing regulations is particularly noteworthy. The introduction of e-invoicing has been phased in over the past few years, with different categories of businesses brought into the system at various times. These inspections suggest that some businesses are still lagging in their adoption of this new technology.
ZATCA’s enforcement is not limited to simply finding violations. The Authority is actively pursuing penalties against non-compliant businesses, potentially including fines and other legal ramifications. The inspections reflect broader government initiatives to improve revenue assurance and address perceived loopholes in the tax system.
The focus on tobacco shops is likely connected to specific regulations surrounding excise taxes on tobacco products. Similarly, increased scrutiny of contracting companies could relate to Value Added Tax (VAT) obligations on construction services. This targeted approach suggests ZATCA is analyzing risk areas within the Saudi economy.
However, these inspections go beyond simply identifying issues. They are designed to proactively discourage tax evasion and promote a culture of compliance among businesses operating within Saudi Arabia. By demonstrating a clear commitment to enforcement, ZATCA aims to create a more equitable system where all companies contribute their fair share.
Whistleblower Incentives & Reporting
ZATCA actively encourages public participation in identifying tax violations. The Authority offers financial rewards to individuals who report instances of non-compliance that are subsequently confirmed through investigation. These rewards can be substantial, ranging from SR1,000 to a maximum of SR1,000,000, equivalent to 2.5% of the value of confirmed violations and fines.
This whistleblower program is intended to supplement ZATCA’s own inspection efforts and tap into a wider network of potential informants. Citizens and residents alike can report concerns through ZATCA’s official website or dedicated mobile application, contributing to improved tax administration within the country.
The availability of these incentives, coupled with ease of reporting, sends a strong signal that ZATCA is serious about tackling tax evasion and relies on public assistance to achieve this goal. It’s important to note that reports must be substantiated for a reward to be issued.
The ongoing nature of these inspection campaigns underscores ZATCA’s commitment to long-term improvements in tax collection. Furthermore, it is a key aspect of the ongoing effort to modernize Saudi Arabia’s financial infrastructure. This includes more efficient tracking of financial transactions and a reduction in opportunities for illicit activities.
Looking ahead, ZATCA is expected to continue its rigorous inspection schedule throughout 2026 and beyond. The Authority plans to further expand the scope of its enforcement activities, potentially incorporating advanced data analytics to identify high-risk businesses and proactively address potential violations. The success of the e-invoicing initiative and continued reduction in reported violations will be key indicators of the effectiveness of ZATCA’s strategy.
The implementation timeline for new tax regulations and the specific criteria for identifying and penalizing non-compliance remain subjects to future announcements from ZATCA. Businesses are advised to stay informed about the latest developments and seek professional guidance to ensure full adherence to Saudi Arabia’s tax laws and avoid potential penalties.
