Saudi Arabia has officially launched a new Value Added Tax (VAT) refund scheme for international tourists, enabling them to claim back the 15% VAT paid on eligible goods and services during their stay. The initiative, which came into effect on April 18, 2025, aims to boost the Kingdom’s tourism sector and align with global practices.
The Zakat, Tax and Customs Authority (ZATCA) announced the regulatory amendments, introducing a 0% VAT rate on certain purchases made by tourists. Refunds will be facilitated upon departure by authorized service providers, who will work in tandem with tourists to ensure all claims meet regulatory conditions.
Read More: UAE, Saudi Arabia deny reports of involvement in talks about land …
Guidelines for the refund process, including the types of goods eligible, minimum purchase thresholds, and application procedures, will be issued by ZATCA. The authority emphasized that both tourists and service providers are equally responsible for adhering to refund regulations, and improperly claimed refunds will be scrutinized.
In a notable provision, tourists from Gulf Cooperation Council (GCC) countries will also be treated as international tourists for VAT refunds—until the Electronic Services Law is implemented, which will redefine intra-GCC VAT treatment.
Refund Process to Be Overseen by Approved Service Providers
To facilitate smooth implementation, ZATCA will authorize specific service providers responsible for handling tax refunds. These providers will not only process the refunds but also share liability if any discrepancies arise. Businesses that wish to participate in the refund system must meet certain criteria and obtain approval to act as VAT-refund suppliers.
The governor of ZATCA has been empowered to issue further technical guidelines, covering key aspects such as tourist eligibility, goods qualification, refund conditions, and application methods. This measure ensures centralized oversight and uniform application across the Kingdom.
New Compliance Rules for Transferring Economic Activities
Alongside the tourist VAT refund scheme, ZATCA also introduced significant changes to the rules governing VAT during business transfers. Taxable businesses transferring economic activities to another entity must now notify ZATCA within 30 days of the transfer date—unless the business has already deregistered for VAT.
Failure to follow the proper procedures, such as providing notification and required documentation, will result in the transferred goods and services being deemed taxable. This policy targets businesses attempting to sidestep VAT obligations during asset transfers.
Even businesses that have deregistered must retain all relevant invoices, records, and financial documentation. Deregistration does not absolve them of any VAT liabilities incurred prior to the cancellation of their registration.
Hajj Visa Issues Leave Thousands of Pakistanis Stranded
In a separate development related to Saudi Arabia, delays and mismanagement by private Hajj tour operators in Pakistan have left approximately 67,000 pilgrims unable to secure their spots for Hajj 2025. An estimated PKR 36 billion remains stuck in Saudi Arabia, with refunds currently off the table. Instead, the Saudi government has proposed adjusting the funds toward next year’s pilgrimage.
Read More: Apple launches major Gulf hiring spree ahead of Saudi online store …
The delay stemmed from the late approval of Pakistan’s Hajj Policy 2025, which disrupted application timelines and prevented operators from making timely arrangements. Some private companies further complicated the process by obtaining court injunctions, which delayed quota allocations. As a result, only 23,620 Pakistani pilgrims will be able to perform Hajj under the private scheme this year—down from the usual 90,000.