Saudi Arabia‘s Zakat, Tax and Customs Authority (ZATCA) has implemented amendments to Value Added Tax (VAT) regulations that will allow tourists to receive refunds on the 15 percent tax paid whilst purchasing goods and services in the Kingdom.
The new VAT exemption, which came into effect on Friday, April 18, states that eligible goods and services provided to tourists will be subject to a zero percent VAT rate, with service providers refunding the imposed tax amount to tourists upon their departure from the Kingdom, the Saudi Gazette reported.
Saudi Arabia to refund VAT to tourists, new regulations in effect
ZATCA will authorise one or more approved service providers to facilitate tax refund services to tourists.
These service providers will be “jointly responsible with the tourist for paying back any amounts proven to have been refunded in violation of the procedures,” according to the authority.
Tourists from Gulf Cooperation Council (GCC) countries will be treated as tourists from outside the GCC until the implementation of the Electronic Service Law.
The ZATCA governor will issue necessary requirements for tax refunds, including implementation stages, conditions for defining a “tourist”, eligible goods for refund, minimum value requirements for refundable goods, approved supplier qualifications, and application procedures.
Additional amendments to the VAT Regulation require taxable persons transferring an economic activity to notify ZATCA within 30 days of the transfer date, unless the transferor has deregistered.
De-registered taxable persons must retain all required invoices, notices, books, and records, as de-registration does not exempt them from paying dues that precede the de-registration date.
The authority clarified that if economic activity transfers do not meet all conditions, including notification to the authority, the goods and services representing the transferred economic activity shall be considered a taxable item.
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