Saudi Tax Dispute Settlement: Process and Deadlines

Settlement is a structured dispute route

The Rules and Procedures for ZATCA’s Internal Settlement Committees and Rules 5–8 of the Zakat, Tax and Customs Committees’ procedural rules govern the route discussed here. This article focuses on Zakat and tax disputes. A settlement application, acceptance of that application, negotiations and an accepted settlement decision are different events.

The internal rules contemplate disputes over ZATCA decisions, including credit balances and refund claims. They do not establish an automatic entitlement to a discount merely because a taxpayer asks to settle. The committee considers the actual law, evidence, dispute and circumstances.

Dariba recommendation: define the disputed issues, periods, amounts, legal grounds and acceptable commercial outcome before applying. Keep undisputed amounts and any payment obligations separately identified. A settlement strategy should include the litigation deadlines and the consequence of not reaching agreement.

Preserve the initial objection and referral periods

Committee Rule 5 allows an initial objection to ZATCA within sixty days from the day following notification of its decision. ZATCA has ninety days to decide. Following notified rejection or partial acceptance, or expiry of the ninety days without a decision, the taxpayer has thirty days under the rule to request internal settlement referral or file directly before the competent chamber.

Internal Settlement Rule 4(1) addresses the pre-litigation application and requires the dispute’s scope, subject, reasons and supporting documents. Do not assume informal exchanges with an officer or an adviser’s discussion amount to a recorded referral.

The route is subject to any valid special procedure for the particular claim. For example, the dedicated historic property VAT refund procedure provides a direct route without the ordinary preliminary objection. Its special conditions and deadline must be applied separately.

Separate admission from the period for deciding the request

Internal Rule 4(2) requires the committee to examine the application and notify acceptance or rejection within no more than ten days from its registration. If admitted, the committee may hold hearings or examine the documents and request explanations without a hearing where appropriate.

Rule 4(4) gives sixty days from acceptance to decide the request, with a further period of up to sixty days requiring the taxpayer’s agreement. Expiry of that period without a decision is treated as an implied rejection.

Dariba analysis: registration and acceptance are different starting points. A generic statement that every request remains open for sixty days from the first email can miscalculate the period. Record the admission decision and any agreed extension; do not assume an extension exists because discussion continues.

Preserve the shorter litigation deadline where the texts differ

Committee Rules 5 and 6 provide a thirty-day route to the competent chamber following the relevant settlement outcome or expiry without settlement. The current downloadable internal rules display sixty days in Rule 4(5), while the committee procedural rules specify thirty.

Dariba recommendation: do not rely on the longer wording to postpone a filing. Work to the thirty-day period under the committee procedural rules and seek prompt case-specific clarification of any discrepancy. Identify the actual notification and expiry events, including any partial outcome, and preserve the right to bring the unresolved issues before the chamber.

This source difference is not a basis for assuming a late claim will be accepted. A particular case’s admissibility belongs to the competent chamber. Nor should the period for the committee to decide a settlement request be confused with the separate period for commencing litigation afterwards.

Formal negotiations during litigation affect case progress

Committee Rule 8 and Internal Rule 4(6) allow settlement negotiations while a dispute is before the first-instance or appellate chambers. Starting the formal negotiations stops progress of the case, with ZATCA notifying the General Secretariat through the applicable mechanism.

That effect should not be attributed automatically to a unilateral settlement application or informal conversation. Obtain and retain the actual notification and case status. If settlement is rejected or the applicable period expires, Rule 8 provides for the case to continue.

Dariba recommendation: appoint one person to reconcile the settlement and litigation records. An internal assumption that the case is paused can lead to missed procedural requests if the pause has not actually taken effect or the proceedings have resumed.

The committee can seek evidence and address conflicts of interest

Internal Rules 3 and 6 provide for the committee’s constitution, consideration and decisions. Its review is based on relevant legislation, principles, precedents and case circumstances; it may seek expertise and supporting explanations. Rule 5 addresses actual or potential conflicts of interest and the replacement or delegation steps where a member or chair is affected.

Dariba recommendation: provide a clear issue schedule, evidence index and explanation of the disputed treatment. If a material conflict concern arises, identify its facts through the proper channel. The existence of a disagreement with an unfavourable view does not, by itself, establish a conflict of interest.

The committee may also conclude that the dispute lacks seriousness or the taxpayer has not supplied required material and reject the request. An incomplete evidence case should not be assumed to remain open indefinitely.

Protect settlement communications without mislabelling the evidence

Internal Rule 6(6) treats committee minutes, deliberations and decisions as confidential and prevents either side relying before the competent chambers on the views, proposals and reconciliation approaches discussed. This is a defined protection for the settlement process.

Dariba analysis: do not turn that protection into a general claim that every underlying record becomes unusable or every fact is exempt from proof merely because it was mentioned in negotiations. Keep the original evidential basis of the return or dispute distinct from the settlement proposals.

Dariba recommendation: identify factual documents, legal submissions and negotiation proposals clearly. Preserve the authorised communication record and avoid circulating settlement material beyond those handling the matter.

Written acceptance determines whether the settlement concludes the dispute

Committee Rule 8 treats the settlement decision as final and ending the case where the taxpayer accepts it in writing within the applicable period. Internal Rule 7 requires notification specifying the period for approval and provides for written or equivalent electronic documentation of acceptance.

Refusal or expiry of the stated response period without the required approval does not amount to automatic acceptance. The unresolved dispute and any pending litigation must then be managed under the applicable rules. A decision returning the case for further examination, with the taxpayer’s agreement under Internal Rule 8, should also be distinguished from a final agreed tax amount.

Dariba recommendation: read the covered issues, years, amounts, payment terms and consequences before accepting. Obtain authority from the person entitled to bind the taxpayer and retain the precise acceptance and approved terms.

Implement the agreement and reconcile the remaining exposure

Internal Rule 7 addresses documentation, approval and the settlement instruments’ enforceability. Payment follows the agreed due dates, including the relevant first instalment where the amount is payable periodically, subject to the applicable instalment rules. A proposed schedule should not be treated as an approved one.

Dariba recommendation: reconcile the settlement with the tax account, amounts already paid, remaining liabilities and any case closure. Separate settled matters from issues still in dispute. The value of the route is a properly documented and implemented resolution; a favourable discussion without timely acceptance and implementation leaves important work unfinished.