Tax lawsuits decline in Saudi Arabia: an indicator of successful reforms
Recent statistics issued by the General Secretariat of the Zakat, Tax and Customs Committees revealed that more than 196,000 tax cases were registered during the past five years (between 2020 and 2025), with a record decrease in the number of new cases during 2025. This remarkable decline reflects an increasing maturity in the legislative and regulatory environment in the Kingdom of Saudi Arabia, and the efficiency of the procedures followed to settle disputes.
Background of tax transformation within the framework of Vision 2030
This development comes within the context of the major economic transformations the Kingdom is undergoing as part of Vision 2030, which aims to diversify income sources away from oil. Recent years have witnessed the implementation and reform of several tax systems, most notably the introduction of Value Added Tax (VAT) in 2018 and its subsequent increase in 2020, in addition to the real estate transaction tax. These changes, despite their importance to the national economy, naturally led in their initial stages to an increase in disputes between taxpayers and the Zakat, Tax and Customs Authority, with the period between 2021 and 2022 seeing a peak in the number of registered cases.
Reasons for the decline in disputes and the efficiency of the justice system
The positive decrease in the number of lawsuits is due to several key factors. First, the development of alternative dispute resolution and mediation mechanisms allows for the resolution of disputes before they reach the courts, saving time and effort for all parties. Second, the complete digital transformation of litigation procedures has accelerated the resolution of cases, with initial dispute resolution cases constituting 80% of all files, thus reducing the need for litigants to resort to complex appeal stages. Furthermore, a rise in legal and tax awareness among businesses and individuals has been observed, leading to increased voluntary compliance and fewer errors in tax returns.
Geographical distribution and type of issues
Geographically, the Riyadh region accounted for the largest share of lawsuits at 60.5%, which is expected given its status as the administrative capital and the Kingdom's largest economic center. This was followed by the Makkah region at 14.7%, and then the Eastern Province at 11.5%. In terms of the types of cases over the five years, Zakat-related lawsuits topped the list at 30%, followed closely by Value Added Tax (VAT) and Customs-related criminal cases at 29%. The year 2025 witnessed a notable shift, with Customs-related criminal cases emerging to constitute 37% of the total, while Zakat disputes declined to only 16%, reflecting a change in the focus of oversight and auditing.
Importance and impact on the investment environment
The decline in tax litigation rates is not merely a statistic; it is a strong indicator of the stability of the Kingdom's investment environment. Domestically, this fosters trust between the private sector and government entities and reduces the burden on the judicial system. Internationally, a clear tax system and efficient, expedited judicial procedures enhance the Kingdom's attractiveness to foreign investors and underscore the success of structural reforms aimed at creating a sustainable and competitive economy aligned with global best practices.
