ZATCA announces important changes to its tax ruling practice

On 2 June 2023, the Zakat, Tax and Customs Authority (ZATCA) issued an official guideline providing important clarifications on the mechanism and application of tax ruling requests.

The existing tax ruling practice in the KSA has been further streamlined and optimized through the recent guideline. In its statements, the ZATCA has announced, among others, the following:

a) Any natural or legal person, whether or not they are registered with ZATCA, can request a tax ruling from ZATCA, provided all relevant requirements are met;

b) In case persons who wish to submit a tax ruling request are not registered, they can file the tax ruling application per email;

c) The guideline sets out the required information and method of submitting the request, using the Tax Ruling Request Form; and

d) The tax ruling may cover any applicable tax law in the KSA, and the ruling shall be a binding opinion for ZATCA.

Rulings can be submitted with respect to all taxes (corporate income tax, withholding tax, value added tax, excise tax, real estate transfer tax).

Similar to other jurisdictions, in cases where the presented facts and background information in the tax ruling request were not sufficiently correct and accurate, the issued tax ruling will be considered invalid.

Conclusion

ZATCA’s recent guideline including clarifications on the application of tax ruling requests is a helpful tool for taxpayers in the KSA seeking clarity on matters of uncertainty regarding the tax treatment of transactions and arrangements in the Kingdom.