For corporate taxpayers in Saudi Arabia, data consistency between GOSI payroll records and ZATCA filings is now a frontline compliance issue. Mismatches across salary, headcount, and contribution data can trigger desk reviews, audits, and penalties. This guide explains what ZATCA looks for, how to reconcile before you file, and the artifacts you should keep on hand for a smooth review.
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Why ZATCA Cares About Your GOSI Data
- Substantiation of payroll deductions (CIT/Zakat): Salaries, bonuses, and employer contributions claimed in corporate income tax or Zakat returns must align with GOSI-reported contributory wages.
- Headcount integrity: Number of employees in GOSI vs. HR/ERP vs. tax schedules (especially for Saudization ratios and sectoral incentives).
- Cross-tax harmony: Payroll costs appearing in CIT/Zakat should reconcile to VAT cost centers (where relevant) and WHT exposure (e.g., non-resident payroll services).
- Risk scoring: Persistent variances elevate your audit risk and slow down refunds or clearances.
Typical Mismatches That Trigger Queries
GOSI ↔ Payroll Ledger
- GOSI contributory wages lower than payroll expense in GL.
- Inactive employees still listed in GOSI; leavers not terminated.
- Allowances included in payroll expense but excluded from GOSI base without basis.
GOSI ↔ Tax Returns
- Employer contribution totals (OHB/annuity) don’t match CIT/Zakat deductions.
- Headcount in schedules ≠ GOSI headcount at period-end.
- Provisioned bonuses deducted in CIT but paid next year with no reversal trail.
ZATCA’s Likely Cross-Checks (What to Get Right)
- Employee master file: Nationality, start/end dates, grade, cost center, GOSI status, IBAN (for payment trail).
- Contributory wage mapping: Basic + regular allowances vs. items excluded from GOSI base (with policy evidence).
- Employer contributions: OHB (2% for all employees), Annuities for Saudis (company share) — tie to GL and bank proofs.
- Year-end provisions: Bonus/leave accrual movement schedule: opening + charge − utilization = closing; link to actual payments.
- Intercompany payroll services: If centralized offshore, confirm no WHT exposure is missed and costs are arm’s-length.
Fast Reconciliation Workflow (Monthly/Quarterly)
- Extract GOSI monthly file (employee roster + contributory wage + employer contribution).
- Compile payroll ledger by cost element (basic, allowances, overtime, EOS, employer GOSI).
- Match headcount and IDs; resolve leavers/hires timing differences.
- Bridge payroll GL to GOSI base (identify amounts in payroll but out of GOSI, e.g., discretionary bonus).
- Tie-out employer contribution totals to bank payments and GOSI receipts.
- Roll-forward accruals; prepare reconciliation memo with ticked schedules.
Illustrative Reconciliation Bridge (Excerpt)
| Item | SAR | Notes |
|---|---|---|
| Payroll expense per GL (Jan–Dec) | 12,600,000 | Basic + allowances + OT + EOS + employer GOSI |
| Less: Non-GOSI items (EOS, discretionary bonus) | (1,150,000) | Outside contributory base by policy |
| Add: Timing diff (Dec payroll paid in Jan) | 240,000 | Accrual in GL; appears in GOSI in Jan |
| = Adjusted payroll comparable to GOSI | 11,690,000 | |
| GOSI contributory wages (summed) | 11,685,400 | Per monthly GOSI files |
| Variance | 4,600 | Within tolerance; explained (rounding) |
Audit-Ready Evidence Pack (Keep for 10 Years)
- Monthly GOSI receipts + contribution summaries; bank transfer proofs.
- Employee master & change logs (hires, promotions, leavers) with effective dates.
- Payroll policy: what’s in/out of GOSI base; allowance matrix with legal basis.
- Accrual roll-forward schedules; approval minutes for bonus schemes.
- Reconciliation memos signed by Finance + HR every quarter.
Special Focus Areas in Saudi Businesses
- Saudi vs. expatriate mix: Correct annuity contributions for Saudi employees; only OHB (2%) for expatriates.
- Site allowances & overtime: Treatment consistency across payroll, GOSI, and CIT/Zakat deductions.
- Contractors vs. employees: Ensure no de-facto employees are parked as vendors (VAT/WHT/CIT risks).
- End-of-service (EOS): Provision vs. payment accounting and deductibility timing.
Automation Tips for Clean Filing
- Build an ETL job that pulls monthly GOSI files and maps to payroll GL codes.
- Deploy variance thresholds (e.g., ±0.3%) with alerts to Finance & HR.
- Lock a quarterly sign-off (HR + Payroll + Tax) before VAT/CIT/Zakat filings.
- Maintain a master mapping table for allowance codes → GOSI treatment → tax deductibility.
Remediation & Voluntary Disclosure
Found historical mismatches? Prepare a period-by-period bridge, quantify impact on CIT/Zakat/VAT, and consider timely corrections or voluntary disclosures to manage penalties. Attach reconciliation memos and GOSI evidence to support the adjustments.
Quick FAQ
Q: Do all allowances have to be in the GOSI base?
A: Not necessarily. Apply your policy and regulations consistently, and document the rationale for any exclusions.
Q: Can we deduct employer GOSI contributions for CIT?
A: Yes, if actually incurred and properly supported by GOSI receipts and accounting records.
Q: What variance is acceptable to ZATCA?
A: There’s no universal “safe harbor.” Keep variances minimal, documented, and reconcilable (timing, rounding, policy).
Key Takeaways
- Reconcile GOSI ↔ Payroll GL ↔ Tax returns monthly or at least quarterly.
- Document treatment of allowances, accruals, and contributions — and apply it consistently.
- Build a durable evidence pack; it’s your first line of defense in any ZATCA query or audit.
