Saudi Arabia has made significant commitments to global tax transparency by implementing the Foreign Account Tax Compliance Act (FATCA) Intergovernmental Agreement (IGA) with the United States and adopting the Common Reporting Standard (CRS). These frameworks require financial institutions and certain corporate taxpayers to meet rigorous reporting standards for cross-border financial accounts.
🌍 Understanding FATCA and CRS
The FATCA IGA is a bilateral agreement between Saudi Arabia and the U.S., obligating Saudi financial institutions to identify and report information on accounts held by U.S. persons to the General Authority of Zakat and Tax (GAZT), which then shares the data with the U.S. Internal Revenue Service (IRS).
The CRS, developed by the OECD, extends similar obligations globally, requiring the automatic exchange of financial account information between participating jurisdictions.
📜 Legal Framework in Saudi Arabia
- FATCA IGA: Effective since 2014, implemented through local compliance guidelines issued by GAZT.
- CRS Implementation: Saudi Arabia began CRS reporting obligations in 2018, aligning with OECD timelines.
- Regulatory Oversight: Managed by the Zakat, Tax and Customs Authority (ZATCA) and the Saudi Central Bank (SAMA) for regulated entities.
Become Our Featured Tax Expert.
This premium ad space is reserved for one tax professional. Put your firm in the spotlight and reach qualified Saudi Arabia leads directly.
To claim this exclusive spot, contact us at [email protected].
🏦 Who Must Comply?
- All financial institutions, including banks, investment entities, insurance companies, and certain custodians.
- Entities classified as Reporting Financial Institutions under FATCA and CRS definitions.
- Corporate taxpayers with investments or accounts in jurisdictions subject to FATCA or CRS reporting.
📅 Reporting Timelines
| Requirement | Due Date | Authority |
|---|---|---|
| FATCA Annual Reporting | By 31 May each year | ZATCA (transmission to IRS) |
| CRS Annual Reporting | By 31 May each year | ZATCA (OECD exchange framework) |
| Account Holder Self-Certifications | Upon onboarding and as status changes | Financial Institution |
- Financial penalties for incomplete or late submissions.
- Possible account restrictions for non-cooperative entities.
- Reputational risks and increased audit scrutiny.
💡 Compliance Best Practices for Saudi Corporates
- Conduct a detailed classification of all entities under FATCA/CRS rules.
- Implement robust onboarding and due diligence procedures.
- Ensure timely self-certification collection from account holders.
- Coordinate closely with financial institutions to verify reporting accuracy.
- Retain supporting documentation for the statutory retention period.
🏁 Conclusion
The dual compliance obligations under FATCA IGA and the CRS reinforce Saudi Arabia’s position in the global fight against tax evasion. Corporate taxpayers must be proactive in meeting these obligations to avoid financial penalties and protect their international business relationships.
