The Zakat, Tax, and Customs Authority announced a new initiative to regulate the conditions and standards for firms and licensed professionals who provide services on behalf of taxpayers, including stricter requirements for registration and the practice of business, as well as penalties ranging up to permanent revocation of registration in cases of involvement in zakat or tax evasion.
The draft requires firms and licensed professionals wishing to provide zakat and tax accounting services to register with the «Fawd» electronic service, in addition to meeting the eligibility requirements specified by the Authority.
New Regulations for Licensees
According to the proposed rules, a licensee must approve the authorization issued by the taxpayer and acknowledge compliance with all conditions and regulations governing the services they provide. The rules also emphasize that the licensee and its employees must be of good character and conduct, and must not have been convicted in the past ten years of any crime involving breach of honor or trust, or fraud.
The regulations also prohibit dealing with any person proven to have committed or participated in acts related to zakat or tax evasion.
Specific Services for Accounting
Firms The draft defines the scope of services that a licensee may provide on behalf of taxpayers, including assistance with registration procedures, filing and amending zakat and tax returns, and submitting refund requests.
Their authority also includes filing objections and settlement requests, attending meetings, and communicating with the Authority on behalf of the taxpayer.
Conversely, the Authority has specified services that licensees are not permitted to perform, including paying zakat or taxes on behalf of the taxpayer.
Prohibited activities also include representing the taxpayer before zakat, tax, and customs committees or in court, as well as services related to customs clearance.
Inspection and Audit of Licensees"
Operations The regulations grant Authority staff the authority to conduct inspections and audits of licensees to verify their compliance with the specified controls.
The Authority is required to notify the licensee 20 days prior to the commencement of inspection procedures; however, it may conduct an inspection without prior notice if there is suspicion of serious violations or if the licensee refuses to cooperate with the Authority’s procedures.
Penalties range from warnings to revocation of registration
; the penalties specified in the draft law are graded according to the nature of the violation, ranging from issuing a warning, requiring the licensee to take specific corrective actions, up to restricting the scope of services the licensee is permitted to provide.
The licensee’s employees may also be required to attend training courses, and penalties may include partial or total suspension of registration for a period not exceeding 60 days.
The Authority has classified a number of practices as serious violations warranting revocation of registration, including assisting a taxpayer in evading zakat or taxes, or intentionally providing incorrect information or documents.
Allowing an unauthorized person to use »Fawd" service data is also considered a serious violation, which may result in the licensee being barred from re-registration for up to 3 years.
30-Day Grace Period to Correct Violations
The Authority has granted current licensees a 30-day grace period from the date the new standards take effect to correct their status and fulfill the required conditions.
At the same time, the Authority emphasized that the authorization granted to the licensee does not transfer the primary responsibility from the taxpayer, as the taxpayer remains primarily responsible for fulfilling all zakat and tax obligations.
