Tourists visiting Saudi Arabia can now claim a refund on the 15% Value Added Tax (VAT) they pay on goods and services during their stay. This follows new amendments introduced by the Zakat, Tax and Customs Authority (ZATCA). The updated VAT regulation came into effect on April 18.
Under the revised policy, VAT will be charged at a zero per cent rate on eligible purchases from approved service providers. Tourists will be refunded the VAT amount upon their departure from the Kingdom.
ZATCA will authorise specific service providers to manage the tax refund process. Both providers and tourists share responsibility for any improper claims. Tourists from Gulf Cooperation Council (GCC) countries will be treated the same as those from outside the GCC for refund purposes. This will remain until the Electronic Service Law is formally implemented.
The governor of ZATCA has been granted authority to issue detailed guidelines for the scheme. These will cover tourist eligibility, qualifying goods, minimum purchase thresholds, requirements for approved suppliers, and the refund application process.
In a separate update, ZATCA clarified VAT regulations for business transfers. Businesses transferring economic activities to another entity must notify the authority within 30 days unless already deregistered. Failure to comply may result in goods and services involved in the transfer being deemed taxable.
ZATCA also stressed that businesses whose VAT registration has been cancelled must continue to retain all necessary invoices and records. Deregistration does not absolve them of existing VAT obligations.
