Tourists Can Now Claim VAT Refunds in Saudi Arabia – New Rules in Effect

Tourists visiting Saudi Arabia are now eligible for a refund on the 15% Value Added Tax (VAT) paid on goods and services purchased during their stay, following amendments to the VAT Regulation introduced by the Zakat, Tax and Customs Authority (ZATCA). The new VAT refund system came into effect on Friday, April 18.

The updated regulation stipulates that a zero percent VAT rate will apply to qualifying goods and services purchased by tourists. The service provider will be responsible for refunding the VAT amount to the tourist upon their departure from the Kingdom.

ZATCA announced that it is authorized to approve one or more service providers to facilitate this refund process. These service providers will also share responsibility with tourists in ensuring the accuracy and legitimacy of refunded amounts. Any refunds found to violate official guidelines or refund procedures will be subject to accountability.

Tourists from Gulf Cooperation Council (GCC) countries will also be treated as international tourists for VAT refund purposes, until the Electronic Service Law is fully implemented across the region.

In addition, ZATCA has authorized its governor to issue detailed guidelines outlining the implementation phases and criteria for VAT refunds. These will include specifications on eligible goods, minimum refund amounts, approved supplier requirements, and conditions defining a qualifying tourist.

In a separate development, amendments to the VAT Regulation also addressed business activity transfers. In cases where an economic activity is transferred from one taxable person to another, the recipient is required to notify ZATCA within 30 days of the transfer, unless the previous owner has already deregistered.

Moreover, businesses that have been deregistered are still required to retain all relevant records, invoices, and documents, and are obligated to settle any outstanding dues accrued prior to deregistration.

ZATCA further clarified that if all conditions of an economic activity transfer are not met—particularly the requirement to notify the authority—the transaction will be treated as taxable.

The new regulation marks a significant move to enhance Saudi Arabia’s tourism experience while maintaining regulatory oversight and compliance standards.