Tax Audits by GAZT in Saudi Arabia

Tax Audits by GAZT in Saudi Arabia: The Department has the right to perform field examination (audit) to ensure fulfillment by the taxpayer of obligations under the Income Tax Law.

Subject to provisions of other Laws, field-audit of a taxpayer may be carried out to gather information in regard to another taxpayer.

Field-audit shall be carried out during working hours of the person subject to field audit. A taxpayer is obliged by Law to provide information as requested by the Department. The Department has the right to field-audit all books and records of a taxpayer without prior notice.

Field audit may be performed at taxpayer’s premises or the Department’s offices based on an official notice by the Department. If books, records and other documents are taken from the business premises, a receipt to that effect must be given to the taxpayer. An auditor from the Department may inspect business premises to get familiar with the nature of business.

Where books and records of an audited person are kept on an electronic medium, that person is required to provide the Department’s auditor(s) with a hard (paper) copy of the requested information if the auditor(s) so request(s).

Where the taxpayer subject to field audit does not cooperate in providing the requested information, the auditor may take measures to obtain accounts, records and other relevant documents that have such information. The auditor may temporarily seize them if he has reason to believe that they may otherwise be hidden, damaged or tempered with by the taxpayer.

When audit is over, the documents must be returned to the taxpayer within 15 days of audit completion date. The Department may keep copies of documents or entries, as needed.

If the Department does not agree with the taxpayer’s return, it will notify the taxpayer of its changes, reasons thereof, additional liability of tax and penalties, and of the taxpayer’s rights to object. The notice to the taxpayer shall be by registered mail or by other means that provide for receipt of the notice by the taxpayer.

As per the Tax Law, the return is considered accepted by the Department after five years of filing if the taxpayer has not received any notice to the contrary from the Department.

Mathematical and material errors may be corrected within ten years of the end of the filing time of the tax year the return represents. The correction could be requested by the taxpayer, or as a result of detection by the Department or audit agencies.

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