Article 40 of the Saudi Value Added Tax Law
المادة 40 من نظام ضريبة القيمة المضافة · الفصل السادس عشر: التهرب الضريبي والعقوبات
The article punishes tax evasion with a fine of not less than the amount of tax due and not more than three times the value of the goods or services involved in the evasion.
Official text (Arabic)
This article has not been amended since the law was issued.
يعاقب على التهرب الضريبي بغرامة لا تقل عن قيمة الضريبة المستحقة، ولا تزيد على ثلاثة أمثال قيمة السلع أو الخدمات محل التهرب.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 40 explained in plain English
This article sets the penalty for tax evasion in the forms listed in Article 39: submitting incorrect or forged documents, returns or information with intent to evade the tax, and bringing goods or services in or out in violation of the laws without paying the tax.
The penalty is a fine between two limits:
- Minimum: the amount of the tax due.
- Maximum: three times the value of the goods or services involved in the evasion.
Note that the two limits are calculated on different bases: the minimum is calculated on the tax itself, and the maximum on the value of the goods or services, not on the tax. The maximum fine may therefore be very large compared with the tax evaded.
The article does not itself set criteria for choosing the amount between the two limits. This penalty differs from the fine in Article 41, which punishes failing to apply for registration within the periods set by the Regulations with a fixed amount of SAR 10,000, since the evasion fine varies with the tax due and the value of the goods or services.
Anyone facing an accusation of evasion is advised to consult a lawyer specializing in tax matters.
Practical example
A merchant evaded tax of SAR 15,000 on goods worth SAR 100,000. Under Article 40, the fine is not less than SAR 15,000 (the amount of tax due), and not more than SAR 300,000 (three times the value of the goods).
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 40 of the Saudi Value Added Tax Law
What is the fine for tax evasion under the Value Added Tax Law?
A fine of not less than the amount of the tax due and not more than three times the value of the goods or services involved in the evasion.
Is the maximum calculated on the tax or on the value of the goods?
The maximum is calculated on the value of the goods or services involved in the evasion, while the minimum is the amount of the tax due.
Which acts count as tax evasion?
Article 39 specifies them, including submitting incorrect or forged documents, returns or information with intent to evade, and bringing goods or services in or out in violation of the laws without paying the tax.
More articles on Tax Evasion and Its Penalty
- Article 39
The article defines the forms of tax evasion: submitting incorrect or forged documents or returns with intent to evade, and bringing goods or services in or out in violation of the laws without paying the tax.
يعد ما يأتي تهرباً ضريبياً: 1 - تقديم مستندات أو إقرارات أو سجلات أو معلومات غير صحيحة أو مزورة أو مصطنعة بقصد التهرب من تأدية الضريبة المستحقة، أو تخفيض قيمتها
- Article 46
The article provides that fines under the Value Added Tax Law do not prevent collecting the tax due, and do not prevent any other penalty provided in another law.
1 - لا يخل إيقاع أي من الغرامات المنصوص عليها في النظام باستيفاء الضريبة المستحقة. 2 - لا يخل تطبيق أي من العقوبات المنصوص عليها في النظام بأي عقوبة أخرى ينص عل
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.