On 29 June 2026, Ministerial Decision no. 1117 dated 22/12/1447H was published in Umm Al-Qura, extending the Cancellation of Fines and Exemption of Financial Penalties initiative — originally issued under Decision no. 653 dated 6/7/1447H — for a further six months running from 1 July 2026 to 31 December 2026.
Most of what has been written about this decision stops at the headline: "extended six months." But the decision contains one clause that changes how you should treat it entirely, and almost nobody mentions it — and it is what makes this extension different from every extension before it.
What actually gets waived
The initiative exempts a taxpayer from four fines. No more than four:
| Fine | Statutory calculation |
|---|---|
| Late registration under any tax law | SAR 10,000 |
| Late filing of a return | 5% to 25% of the tax that should have been declared |
| Late payment | 5% of the unpaid tax per month or part month |
| Return correction (VAT) | 50% of the difference between the calculated and the actual tax |
Look at rows two and three: both are cumulative. The late-payment fine grows month after month for as long as the principal debt stands, and the late-filing fine climbs until it reaches a quarter of the tax due. A business with a quarterly return unfiled for two years is not looking at a fixed number — it is looking at a figure that is still working against it every month.
The three conditions, and why the first one is not the one that stops people
To benefit, a taxpayer must satisfy three conditions together:
- Be registered with the Authority for tax purposes.
- File every outstanding return — every single return not yet submitted.
- Pay the full principal tax debt attached to those returns, or apply for an instalment plan.
Condition two is the real obstacle. The initiative waives the fine; it does not waive the return itself or the principal tax. A business that stopped filing eight quarters ago does not need one application — it needs eight fully computed returns. That is accounting work measured in weeks, not days. If your tax record has gaps, the remaining window is shorter than it looks.
The decision also sets coverage running from 1 June 2022, so the window is not open indefinitely in the other direction either.
The clause that changes the arithmetic: the cut-off is frozen
Here is the substantive difference. Clause Sixth of the decision states that the exemption does not apply to fines arising on returns due for submission on or after 1 July 2026 — even if the initiative is extended beyond 31 December 2026.
Read that again. In every previous extension, the cut-off date moved along with the initiative, so anyone who fell behind on a newer return would be picked up by the next extension. This time the date is frozen. The pool of forgivable fines closed on 30 June 2026 and will not grow, whatever happens next.
In practice:
- Your old returns (due before 1 July 2026): eligible, and the deadline is 31 December 2026.
- Your current returns (due after that): permanently outside the initiative. The bet that "a future extension will cover them" is over.
Anyone who has been deferring compliance on the assumption that the initiative renews every six months has just had that safety net withdrawn. Staying current is no longer optional, even if the initiative is extended again.
What the initiative does not cover
Three categories stay outside the exemption no matter what you do:
Tax evasion fines. Clause Fifth is explicit. And evasion is not limited to forgery: submitting incorrect documents to reduce tax falls under the same heading, and the penalty ranges from the value of the tax due up to three times the value of the goods or services.
Fines imposed under Article 45 of the VAT Law. This is the "violation of any other provision of the Law or the Regulations" article, capped at SAR 50,000. It is the residual article used for anything that does not fit another heading — and excluding it means a wide band of procedural violations stays payable after the late-filing fines have dropped away.
Fines already paid before the initiative took effect. The initiative does not refund money.
It is also worth flagging that e-invoicing violations caught in field inspections run on their own separate penalty schedule: a warning and a correction window first, then an escalation across inspection visits from SAR 1,000 to 5,000 to 10,000 per violation, reaching as much as SAR 40,000 on repetition. That track is not one of the four fines named in the initiative and has nothing to do with it. Anyone assuming the initiative cleans up their e-invoicing file will discover otherwise at the first visit. See our complete guide to ZATCA Fatoorah e-invoicing for exactly what gets checked in the field.
The instalment trap
Clause Fourth grants a genuine benefit: if the Authority approves an instalment plan, the late-payment exemption extends to instalments falling due after the initiative ends. In other words, an approved plan lets you keep the exemption alive past 31 December.
But the next phrase in the same clause is the condition: unless the taxpayer defaults on the approved plan. One missed instalment puts the fines back on the file. And the instalment request itself must be submitted while the initiative is still in force — that is, before 31 December 2026. An application filed in January carries no weight here.
What to do in the months remaining
The order matters, because each step blocks the next:
- Check your registration status. Nothing in the initiative works until you are registered. Verify your tax number with our VAT number checker, and read when a supplier's number actually earns you input tax deduction.
- Inventory every unfiled tax period up to 30 June 2026. That is your only eligible list, it is closed, and it will not change.
- Rebuild the sales and purchase ledger for each period. This is where the time actually goes: missing invoices, tax rates applied to VAT-inclusive amounts, and percentages computed backwards. Use the VAT calculator to separate inclusive from exclusive amounts, and review how VAT is calculated in Saudi Arabia.
- Fix the invoice format before you recompute. An invoice missing a statutory field is not valid evidence. Produce compliant templates with the tax invoice generator, and confirm which invoice type binds you via the simplified tax invoice and Article 53.
- File the returns, then pay the principal or request the instalment plan — in that order, and before 31 December.
The bottom line
The initiative is not a general amnesty. It is a specific trade: declare everything you failed to declare, pay the principal tax in full, and four late-related fines drop away. What separates this round from the ones before it is that the door does not merely close on 31 December — the list of what can be forgiven already closed on 30 June 2026, and no later extension will add anything to it.
The four remaining months are accounting time, not waiting time.
If your tax record has gaps and you do not know the size of what you are facing, get in touch for a quick review: we inventory the unfiled periods and separate the fines that can still be waived from the ones that will remain payable after 31 December, so you know the real number before you start.