Saudi Re Fund Tax Started VAT Refund 2025
Tourists in Saudi Arabia can now reclaim the 15% Value Added Tax (VAT) they pay on shopping, dining, and other services during their visit. Introduced on April 18, this initiative aims to enhance the country’s appeal as a tourist destination and streamline the tax process for visitors. The Zakat Tax and Customs Authority (ZATCA) revised its VAT regulations to implement the refund system, ensuring tourists enjoy a smoother experience.
Under the updated rules, tourists will pay 0% VAT upfront on eligible purchases when buying from approved retailers, hotels, or service providers. The 15% tax they initially pay will later be refunded as they exit the country through designated channels. ZATCA has partnered with authorized agencies to manage refund claims, but tourists and these agencies will share accountability if errors or false claims are detected during audits.
For now, tourists from Gulf Cooperation Council (GCC) countries (such as the UAE, Qatar, or Oman) will follow the same refund process as non-GCC visitors. This temporary measure will remain until Saudi Arabia finalizes its Electronic Service Law, which is expected to modernize tax procedures and potentially introduce digital refund systems.
Key details of the VAT refund scheme will be outlined in official guidelines released by ZATCA’s governor. These guidelines will clarify:
- Eligibility criteria (e.g., length of stay, types of visas).
- Qualifying goods and services (e.g., retail purchases, hotel stays).
- Minimum spending thresholds to claim refunds (to avoid small, frequent claims).
- Requirements for businesses to become approved VAT-refund partners.
- Step-by-step refund procedures for tourists, including deadlines and documentation.
In related updates, ZATCA announced stricter rules for businesses transferring ownership or operations. Companies must inform the authority within 30 days of transferring assets or economic activities to another entity, unless they’ve already canceled their VAT registration. Even after deregistration, businesses must retain all financial records, invoices, and tax documents for auditing purposes, as closing a VAT account doesn’t eliminate existing tax liabilities.
ZATCA also emphasized that non-compliance with transfer rules—such as failing to notify the authority—could result in goods or services being taxed as usual. This ensures businesses adhere to transparency standards and avoid penalties.
