Saudi Arabia To Introduce VAT Refunds for Tourists Starting in 2025

JEDDAH: In a move aimed at boosting tourism, Saudi Arabia will begin offering refunds on value-added tax for eligible purchases made by tourists starting in 2025, the government announced.

The Zakat, Tax, and Customs Authority proposed changes to the VAT Implementing Regulations in August, which were open for public consultation via the Istitlaa platform until Sept. 17. The proposed amendments cover the definition of eligible goods, the refund process, and the role of authorized service providers in handling claims.

This initiative is part of Saudi Arabia’s efforts to enhance its global appeal as a tourist destination under the ambitious Vision 2030 plan. The National Tourism Strategy aims to attract 150 million visitors by the end of the decade and increase tourism’s contribution to the Kingdom’s gross domestic product from 6 percent to 10 percent.

In its 2025 budget statement, the Ministry of Finance noted: “The introduction of VAT refunds for tourists in Saudi Arabia is designed to improve the traveler experience while ensuring tax compliance.”

According to the proposed changes, tourists will be able to claim VAT refunds on goods purchased in Saudi Arabia for personal use, provided the items are taken out of the country. Certain goods, including vehicles, tobacco products, and food, will be excluded from the refund scheme.

Refunds will be processed through authorized service providers, who will verify eligibility, manage claims, and maintain the necessary records. These providers may charge a commission for their services, while ZATCA will retain the authority to review and reject claims if necessary.

The proposal defines a tourist as someone who is not a permanent resident of Saudi Arabia or any other Gulf Cooperation Council state that applies VAT. Transport crew members and other specific categories will be excluded. 

Tourists from GCC countries will be treated as non-GCC visitors until a unified VAT refund system is established across the region.

ZATCA’s governor will oversee the implementation of the refund system, including setting the conditions for eligible goods, processing refund requests, and authorizing service providers.

The VAT refund initiative is part of broader efforts to position Saudi Arabia as a leading global tourism destination. By refining tax policies and enhancing the shopping experience for international visitors, the Kingdom aims to attract higher spending and stimulate growth in the tourism sector.

This move also reflects Saudi Arabia’s focus on economic diversification and robust tax governance, reinforcing its competitiveness as a global hub for both tourism and investment.