15 percent VAT paid by tourists in Saudi Arabia will be refunded to them upon their departure

The 15% value added tax (VAT) that visitors pay when they buy products and services in Saudi Arabia will be reimbursed to them when they leave. The VAT Regulation has been amended in this respect by the Zakat, Tax and Customs Authority (ZATCA). Friday, April 18, marked the implementation of the new VAT exemption.

According to the authority, the amendment states that the rate of VAT would be zero percent on qualified goods and services that a service provider offers to visitors. The service provider will also reimburse the tourists for the amount of VAT that was imposed when they left the Kingdom. 

According to the amendment, the authority's job is to give permission to one or more licensed service providers to help tourists with tax refunds.

The tourist and the authorized service provider share responsibility for repaying any money that has been refunded in violation of the rules and regulations pertaining to refunds or the authority's rulings on tourist tax refunds, the ZATCA stressed. In this regard, visitors from Gulf Cooperation Council (GCC) nations will be handled similarly to visitors from other GCC nations until the Electronic Service Law is put into effect.

In order to provide tourists with tax refunds, the ZATCA gave its governor the authority to establish the required regulations. These requirements include the steps and conditions for putting the tourist tax refund mechanism into place, the additional requirements for determining whether a natural person qualifies as a tourist, the goods that are eligible for refund, the minimum value of those eligible for refund, the requirements for determining whether a taxable supplier is an approved supplier, and the requirements for filing refund applications.

Separately, the VAT Regulation modifications affirmed that, unless the transferor has deregistered, the transferee must notify the ZATCA within 30 days of the transfer date if a taxable person transfers an economic activity to another.