Article 65 - Security

In cases other than those referred to in the second and third Paragraphs of this Article, the Authority may require the Taxable Person to provide a cash guarantee or a bank guarantee against the performance of its tax obligations, subject to the following controls: ^[101]

1. The Authority shall make all requests for cash guarantee or bank guarantee to a Taxable Person via a written notification indicating the type, value and duration of the required guarantee, provided that the duration does not exceed twelve months. The written notification shall indicate the date by which a Taxable Person must provide the guarantee, provided that in all cases the Taxable Person shall be allowed no less than twenty (20) days to provide the guarantee from the date of the written notification.

2. The Authority shall determine the value of the guarantee required by the Taxable Person based on the estimated average quarterly value of the Output Tax, or double the average quarterly value of the Output Tax in the case of a Nonresident Taxable Person that does not appoint a tax representative. In certain cases, the Authority may, at its discretion, set the minimum and maximum value for the value of security required from the Taxable Person, and shall have the right to use other calculation methods in cases where the Authority considers it necessary.

3. The cash guarantee amount shall be held in a separate account from the Taxable Person's tax account.

4. Where formal collection procedures have commenced in respect of any amounts due for VAT and such amounts remain unpaid, the Authority may, after notifying the Taxable Person, set off the cash guarantee against such unpaid amounts due, or execute the bank guarantee up to the unpaid amount due.

5. In cases where the cash guarantee or bank guarantee has been used to set off amounts due for VAT, the Authority may request a new cash guarantee or bank guarantee from the Taxable Person in accordance with the controls specified in this Article.

6. After the expiry of a guarantee period, the Authority may retain the cash guarantee or require the bank guarantee remain in force for an additional similar period; otherwise the Authority may credit the guarantee amount to the Taxable Person's account by setting off the guarantee amount against any VAT related liabilities that may be due, unless the Taxable Person requests that the Authority refund or return the guarantee to the Taxable Person.

In cases where a formal review or appeal is lodged against an appealable decision, and the Authority has evidence or reason to doubt that the Taxable Person may not pay the disputed Tax, the Authority may require a cash guarantee or bank guarantee from the Taxable Person up to a maximum value of the unpaid amount of Tax and associated penalties arising in connection with the decision. A notification requiring cash security or a bank guarantee shall be issued in writing.

Notwithstanding anything in these Regulations, the Customs Department may require cash guarantee or a bank guarantee from a Person importing Goods into a customs duty suspension regime in the Kingdom for an amount up to the value of Tax that would be payable on the import of those Goods.