KSA: Implementation of new electronic filing requirements Tax Insights

Tax Insights
from Zakat and Tax Services
Middle East
KSA: Implementation of new
electronic filing requirements
February 2016
In brief
The Department of Zakat and Income Tax (“DZIT”) issued on 1 February 2016 an internal circular
concerning the introduction of a new electronic filing system (Erad). As advised in the circular, all tax,
withholding tax (“WHT”), Zakat returns, and returns subject to both tax and Zakat (i.e. mixed entities)
will be required to be filed on Erad. We understand this to be applicable to all returns for the financial
year ended 31 December 2015 and onwards as well as returns not yet filed.
Currently, only Zakat and WHT payers are e-registered on DZIT’s website for electronic filing. With an
aim to have a unified system, and discard the manual filing process, all tax/Zakat payers will be
required to register on Erad. Henceforth, the old online registration will also not be valid.
The timeline for the migration advised by DZIT are short and will require urgent consideration by
tax/Zakat payers.
In detail
On 1 February 2016, DZIT
issued a circular for Erad’s
implementation, with the
following action-plan and
timeline:
 DZIT will stop receiving the
returns manually a week
before launching Erad on 14
February 2016, and finalize
all the received returns
before 17 February 2016.
 DZIT will stop the SADAD
(an online system to
facilitate payment to
government) on 17
February 2016, and process
only the issued and un-paid
tax bills.
 DZIT will deactivate the
current electronic filing
system on 17 February
2016. However, the system
will exclusively work on
non-closed
filings/transactions during
that day.
 DZIT offices will continue
working until opened
filings/transactions are
closed in coordination with
the electronic filing
system’s management. In
case the current opened
filings/transactions are not
closed before the above
timeline, DZIT office shall
be held accountable.
 DZIT will start transferring
all the data from the
existing filing system to
Erad from 18 February
2016.
 Based on our discussions
with DZIT, it will send
email and text message to
users registered on Erad.
 During the migration of
returns from old system to
Erad, DZIT will ask
tax/Zakat payers to confirm
the existing information. If
any information is required
to be updated, we
understand the system will
facilitate this.
The takeaway
Considering the tight deadlines
provided by the DZIT, all
tax/Zakat payers should
initiate the registration on
Erad at the earliest. In this
regard, DZIT has provided an
instructional video to assist.
If it is feasible, returns which
are due (for instance,
consortium/ partnership
returns) or overdue, and which
can be filed manually, should
be filed at the earliest
opportunity - before 14
February 2016.
For January 2016 WHT
returns, for which the latest
due date before accruing
penalty is 10 March, tax payers
are recommended to file on the
existing system at the earliest.
The new online registration
and filing system may take
some time to become fully
functional, earlier filing should
help avoid penalties.
www.pwc.com/me
Tax/Zakat payers should
closely monitor the migration
process and promptly provide
information to DZIT to
complete the process.
We believe that tax/Zakat
forms have also been changed
significantly. These changes
and other news related to the
change in filing system should
be followed closely.
Let’s talk
For a deeper discussion of how this issue might affect your business, please contact:
PwC Middle East Tax and Legal services
Jeddah
Riyadh
Mohammed Yaghmour
Soudki Zawaydeh
[email protected]
[email protected]
Mohammed Hussein Amawi
Mohammed Al-Obaidi
[email protected]
[email protected]
Yaseen AbuAlkheer
Abdulkhamid Muminov
[email protected]
[email protected]
Khobar
Ebrahim B Karolia
[email protected]
Mugahid Hussein
[email protected]
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