Saudi Arabia announces VAT refund for tourists

RIYADH: Saudi Arabia has announced that tourists will now be eligible for a refund of the 15% Value Added Tax (VAT) paid on goods and services purchased within the Kingdom.

According to the Saudi Gazette, the Zakat, Tax and Customs Authority (ZATCA) has amended VAT regulations to allow for a 0% VAT rate on certain eligible goods and services for tourists. The updated regulation took effect on Friday, April 18.

Refunds will be processed by authorized service providers upon tourists’ departure from Saudi Arabia. ZATCA will designate and authorize these service providers to facilitate the tax refund process.

The authority stated that both the service provider and the tourist share responsibility for ensuring the refund complies with regulatory requirements. Specific criteria for eligible goods, minimum purchase thresholds, and application procedures will be outlined in upcoming guidelines issued by ZATCA.

Notably, tourists from Gulf Cooperation Council (GCC) countries will be treated as international tourists for VAT refund purposes until the Electronic Services Law is implemented.

Additional amendments to the VAT regulation include obligations for businesses transferring economic activities. Taxable persons must notify ZATCA within 30 days of a transfer, unless already deregistered. Deregistered businesses are still required to retain all tax-related records and remain liable for any obligations incurred prior to deregistration.

Failure to comply with transfer conditions, including proper notification and documentation, will result in the transferred goods and services being treated as taxable.

Read More: Over 67,000 Pakistanis ‘risk’ missing Hajj 2025

Earlier, approximately 67,000 Pakistani pilgrims risk miss Hajj this year due to delays and mismanagement by private tour operators.

According to sources, the crisis has also left PKR 36 billion, collected from pilgrims, stuck in Saudi Arabia, with the Saudi government reportedly refusing refunds and instead offering to adjust the funds for next year’s pilgrimage.

Sources revealed that the delay in approving Pakistan’s Hajj Policy 2025 prevented private operators from submitting applications on time. Although the funds were transferred to Saudi Arabia, insufficient time and failure to coordinate timely arrangements with Saudi authorities led to incomplete preparations.

The lack of prompt communication and coordination with the Saudi government further exacerbated the issues, sources added.

The Ministry of Religious Affairs reported that some private companies obtained court injunctions, which stalled the allocation of the private Hajj quota.

As a result, only 23,620 pilgrims will be able to perform Hajj 2025 under the private scheme this year, a significant drop from the usual 90,000 Pakistanis who undertake the pilgrimage annually through private operators.