Sign World wins initial ruling canceling SAR 2.6M customs duty differences

Logo of National Signage Industrial Co. (Sign World) 

National Signage Industrial Co. (Sign World) said it received on Nov. 24 an initial ruling in its favor from the General Secretariat of the Zakat, Tax and Customs Committees, canceling a decision of the Zakat, Tax and Customs Authority (ZATCA) on collecting customs duty differences from the company under a tariff-classification item.

The company said the case — previously disclosed in its listing prospectus — was related to customs duty differences on 73 customs declarations at a total value of SAR 3.01 million, stemming from a tariff classification dispute and undervalued freight charges.

On the undervalued freight charges, Sign World informed the committee that it accepted this item due to differences in freight value, noting that some invoices were settled with a 10% bank transfer while the remainder was paid by a letter of credit in the supplier’s name.

Further, Sign World clarified that based on the initial ruling issued by the First Customs Committee in Riyadh, the SAR 2.61 million collection decision related to the tariff classification dispute was cancelled. Accordingly, it will not incur that amount of the customs assessment.

However, the company accepted the customs adjustment related to freight-value differences. As a result, it will recognize SAR 397,400 in customs duty expenses, limiting the net impact on its financial statements to SAR 397,400 instead of the previously claimed SAR 3.01 million.

On the expected financial impact — including the claimed amount and any related fees — Sign World reiterated that the committee canceled the SAR 2.61 million assessment, which it will not incur.

Regarding the effect on its financial statements, the company said the previously assessed SAR 2.61 million in customs differences were voided and will not be recorded as an expense or provision, while SAR 397,400 will be recognized in its profit/loss statement.

It added that no material impact on cash flows is expected beyond the accepted amount, Sign World explained.

The company stressed that the ruling is preliminary and subject to appeal by the ZATCA within 30 days of receipt, noting that it does not intend to challenge the decision.

According to Argaam data, Sign World listed on the Nomu Parallel Market iin September at SAR 12 per share.