Saudi Arabia Introduces New VAT Refund Scheme for Tourists

RIYADH: Tourists visiting Saudi Arabia are now eligible to receive a refund on the 15% Value Added Tax (VAT) paid on goods and services during their stay. This VAT refund initiative officially took effect on April 18, following regulatory amendments announced by the Zakat, Tax and Customs Authority (ZATCA).

Key Highlights of the VAT Refund Scheme for Tourists

• Zero-Rate VAT on Tourist Purchases
  Under the updated rules, eligible purchases made by tourists from approved service providers will be taxed at a zero per cent VAT rate. Tourists will then be refunded the VAT amount they paid upon departing from the Kingdom.

• Designated Service Providers
  ZATCA will license specific service providers to manage the tourist VAT refund process. These entities will share accountability with tourists if any refund is later found to be claimed improperly, according to a report by Saudi Gazette.

• GCC Tourists Also Eligible (Temporarily)
  Until the Electronic Service Law is implemented, tourists from GCC countries will be treated the same as non-GCC tourists, making them eligible for VAT refunds under the same conditions.

• Implementation Guidelines Forthcoming
  The Governor of ZATCA has been authorized to issue detailed guidelines for the refund program. These will define:

  • Tourist eligibility

  • Types of goods/services covered

  • Minimum purchase amounts

  • Criteria for businesses to qualify as approved suppliers

  • Application procedures for refunds

Other VAT Regulation Updates

• Transfer of Economic Activity
  Businesses transferring operations to another entity must inform ZATCA within 30 days of the transfer date—unless they have already deregistered for VAT.

• Post-Deregistration Requirements
  Businesses whose VAT registration is cancelled are still required to retain all tax-related documents and invoices and fulfill any remaining VAT liabilities.

• Non-Compliant Transfers Are Taxable
  If a transfer of economic activity fails to meet legal requirements, such as proper notification, then the goods and services involved will be treated as taxable.

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