Saudi Arabia: Approves Major Regulatory Amendments for Car Rental Sector

Saudi Arabia has Approved Key Amendments to Car Rental and Rental Broker Regulations.

A key change clarifies the definition of “reservation,” aligning it with the digital booking process.

Financial requirements now include a SR100,000 guarantee for rental companies, with exemptions for entrepreneurial establishments to support small businesses.

The removal of restrictions on renting cars with a driver and the elimination of hourly rentals offer greater flexibility.

The minimum rental duration with a driver is now set at six hours.

New penalties enforce compliance, requiring rental companies to provide proof of vehicle receipt when contracts remain open due to financial obligations, with a SR1,000 penalty for non-compliance.

Contracts must be issued through the designated electronic system, with a SR4,000 fine for violations.

Reporting stolen vehicles now terminates the rental contract, with a SR3,000 fine for non-compliance.

Operating with an expired licence incurs a SAR5,000 fine, and requiring tenants to sign additional documents beyond the official contract results in a SR3,000 fine.

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Saudi Arabia: Banks Banned From using WhatsApp Communications

The Saudi Central Bank (SAMA) has announced a ban on the use of instant messaging applications, such as WhatsApp, by local banks for customer communications, citing these platforms as unreliable. In response, the Central Bank has urged financial institutions to explore secure alternatives, such as integrating instant messaging services like Live Chat or ChatBot within their applications or websites, while ensuring compliance with personal data protection requirements.

Local banks have been instructed to implement these measures and educate their staff, including branch, customer service, and marketing employees, about the new guidelines, conducting necessary assessments to ensure compliance.

The Media and Awareness Committee at Saudi Banks has highlighted the prevalence of fraud cases involving impersonation of charitable organisations or public figures on social media.

Fraudsters deceive victims by pretending to represent official entities, using fake documents and seals to solicit fees for supposed financial assistance.

The committee has emphasised that legitimate organisations do not solicit donations or search for beneficiaries through social media or instant messaging platforms. Fraudsters often lure victims by falsely claiming they are entitled to donations or support from well-known charities, or by exploiting the names of legal entities, demanding fees through money transfers or payment links.

Customers are encouraged to use the secure SADAD system, available in all Saudi banks and banking applications, for official bill payments and service fees. In the event of fraud, immediate notification to the bank is crucial for recovery actions.

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Saudi Arabia: SAMA Introduces New Financial Regulations for Foreign Entities

The Saudi Central Bank (SAMA) has introduced new regulations concerning Close-out Netting and Related Collateral Arrangements, now in effect for all financial institutions under its jurisdiction in Saudi Arabia.

These regulations are designed to manage netting agreements and financial collateral arrangements, particularly in scenarios involving bankruptcy proceedings.

The regulations enable financial institutions to quickly terminate, liquidate, and settle obligations in the event of a default, thereby reducing potential losses.

The netting process consolidates obligations into a single currency, determining a net balance owed between parties, which enhances risk management efficiency.

The regulations apply to specific qualified financial contracts, including currency and interest rate swaps, commodity swaps, forward rate agreements, credit derivatives, securities repurchase agreements, commodities contracts, and Shariah-compliant financial contracts like murabaha.

For foreign multibranch entities operating in Saudi Arabia, the regulations clearly define obligations under multibranch netting agreements, limiting liabilities and ensuring financial clarity in the event of a local branch bankruptcy.

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Saudi Arabia: Finance Minister Approves Executive Regulations for Zakat Collection

Agraam, 15 February 2025: The Saudi Finance Ministry has approved the latest executive regulations for Zakat collection, aimed at streamlining the process across various business sectors.

The comprehensive 128-article regulations provide detailed guidance on Zakat procedures, addressing challenges faced by those required to pay.

These regulations includes all aspects of Zakat collection, including rules established through independent ministerial decisions.

They cover the calculation of Zakat for taxpayers, financing activities, and investors in investment funds.

Additionally, exemptions are outlined for properties owned by endowments, charitable organisations, and training units.

Significant updates include the introduction of a minimum Zakat base and a cap to protect taxpayers from escalating costs.

These regulations will apply to fiscal years beginning 1 January 2024, with declarations due in 2025, following the specified conditions and guidelines.

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Saudi Arabia: Health Ministry Enforces Compliance with Health Regulations

Ajel, 12 February 2025: The Health Ministry has emphasised the necessity of full compliance with the approved regulations and laws regarding the practice of health professions, private health institutions, and pharmaceutical establishments and products.

The ministry has added that the Health Professions Practice System stipulates that a health practitioner must not engage in diagnostic and treatment methods that are not scientifically recognised or prohibited in the Kingdom.

It is also prohibited, except in cases specified by the executive regulations, for the practitioner to advertise themselves or promote themselves directly or through intermediaries.

The Private Health Institutions System also stipulates the prohibition of advertising health institutions except in accordance with the executive regulations and professional ethics, and it prevents the health practitioner from advertising themselves or using unapproved titles.

The Pharmaceutical Establishments and Products System states the prohibition of trading pharmaceutical and herbal products before registering them with the General Authority for Food and Drug, and that pharmaceutical product advertisements must comply with the regulations specified in the executive regulations.

Anyone who sells, dispenses, or possesses unregistered pharmaceutical products with the intent to trade is considered in violation of this system.

The Health Ministry has stated that penalties in these cases include: a financial fine of up to 10 million riyals, imprisonment for up to ten years, closure of the establishment, and revocation of the licence (for the establishment and the practitioner).

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Saudi Arabia: Government Entities Exempted From Fines on Violations

Agraam, 8 February 2025: A royal decree has been issued in Saudi Arabia, exempting government entities from penalties and fines associated with violations of municipal licensing regulations.

These entities are required to address and rectify the violations within one year from the date of the decree.

The decree also authorises the Municipalities and Housing Minister to extend the exemption period for an additional year.

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Saudi Arabia: Waives Tax Fines

Arabian Business, 4 February 2025: Saudi Arabia has announced it will waive a range of fines and penalties on tax violations as it looks to support businesses registered in its tax system.

The Zakat, Tax and Customs Authority (ZATCA) has urged taxpayers to seize the opportunity presented by the cancellation of fines and exemption of penalties initiative, which is available until 30 June 2025.

This initiative offers a reprieve from fines associated with late registration, payment, and filing of returns under all tax laws.

Additionally, it includes waivers for penalties related to correcting VAT returns, violations of VAT field control, and non-compliance with e-invoicing and other VAT regulations.

To benefit from this initiative, taxpayers must be registered with the tax system, submit any previously unfiled returns to ZATCA, and settle all outstanding principal tax debts related to those returns.

An option to apply for an instalment plan is also available, provided the application is made while the initiative is active and all payments are made on time as per the approved schedule.

However, the initiative does not extend to penalties related to tax evasion or fines that were settled before the initiative commenced.

ZATCA encourages taxpayers to familiarise themselves with the initiative’s details through the simplified guidelines on its website.

These guidelines offer a thorough explanation of the types of penalties covered, the conditions for exemption, the process for managing instalment payments, and information on field control violations.

For further inquiries, taxpayers can contact ZATCA via phone: 19993, X: @Zatca_Care, Email: info@zatca.gov.sa and Online: zatca.gov.sa.

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