In a move to boost tourism, Saudi Arabia has announced that the 15 percent value-added tax (VAT) paid by tourists on goods and services during their stay will be refunded upon departure.
The initiative came into effect on Friday, 18 April, following amendments to the VAT regulations by the Zakat, Tax and Customs Authority (ZATCA).
Under the updated framework, a zero percent VAT rate will apply to qualifying purchases made by tourists through approved service providers. ZATCA will appoint one or more authorised providers to manage the VAT refund process, the Saudi Gazette reported.
These providers will be held jointly responsible with tourists for any refunds found to have breached the outlined procedures.
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Until the Electronic Services Law is enacted, tourists from other Gulf Cooperation Council (GCC) countries will be treated in the same manner as those from outside the GCC with regard to VAT refunds.
ZATCA’s governor will issue detailed requirements governing the refund system, including implementation phases, criteria for defining a “tourist”, eligible goods, minimum spend thresholds, approved supplier standards, and the application process.
Additional changes to the VAT regulations require businesses transferring economic activities to notify ZATCA within 30 days of the transfer, unless the seller has already been deregistered.
Deregistered entities must still retain all relevant invoices, records, and documentation, as deregistration does not absolve them of liabilities incurred prior to the cancellation date.
Moreover, if a transfer of economic activity fails to meet ZATCA’s stipulated conditions — including timely notification — the related goods and services will remain subject to VAT.
This VAT refund initiative supports Saudi Arabia’s National Tourism Strategy, which targets 127 million visitors and SAR 346.6 billion in tourism spending by 2025.
In recent years, Kingdom has introduced various tourism-friendly measures, including a 2019 system allowing nationals from multiple countries to obtain tourist visas on arrival or via an online portal.
On December 16, 2024, the United Arab Emirates (UAE) announced the launch of a new value-added tax (VAT) refund system for e-commerce purchases made by tourists during their stay in the country. The system is considered the first of its kind in the world.
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