Saudi Arabia is taking a significant step to boost its tourism industry by introducing a VAT refund system in 2025. This initiative aims to attract more foreign visitors and increase Saudi Arabia’s appeal as a global destination. The VAT refund plan falls under the Vision 2030 strategy, which focuses on enhancing tourism and economic growth.
The Saudi Zakat, Tax, and Customs Authority (ZATCA) announced the VAT refund plan to allow tourists to reclaim VAT. Tourists will be able to claim refunds on goods for personal use, provided the items are taken out. Certain goods, such as vehicles, tobacco, and food, will not be eligible for the refund scheme under the new policy.
ZATCA proposed changes to the VAT Implementing Regulations in August, opening them for public consultation until mid-September. The proposed amendments cover the criteria for eligible goods, the refund process, and the role of authorized service providers. These providers will process claims and verify eligibility, ensuring a smooth refund process for tourists.
Eligibility and Process
The VAT refund system will target tourists who are not residents of Saudi Arabia or any Gulf Cooperation Council (GCC) country. However, Saudi authorities will treat tourists from GCC countries as non-GCC visitors until they establish a unified VAT refund system across the region.
Authorized service providers will process refunds and may charge a commission for their services. ZATCA will review and reject claims if necessary.
Boosting Saudi Arabia’s Tourism Goals
The VAT refund initiative aligns with Saudi Arabia’s National Tourism Strategy, aiming to attract 150 million visitors by 2030 and increase tourism’s contribution to the national GDP from 6% to 10%. The Ministry of Finance highlighted that this move aims to improve the traveler experience while ensuring tax compliance.
In its 2025 budget statement, Saudi Arabia outlined its plan to attract 127 million visitors by the end of 2025. Tourism revenue is expected to reach SR346.6 billion, contributing significantly to the country’s non-oil economy.
Part of a Broader Vision
The VAT refund system reflects Saudi Arabia’s broader efforts to position itself as a leading global tourism hub. The initiative aims to stimulate tourism growth by enhancing the shopping experience and attracting higher spending from international visitors.
This move is also in line with the Kingdom’s focus on economic diversification and robust tax governance, making it more competitive as both a tourism and investment destination.
A Steady Increase in Tourist Arrivals
In recent years, Saudi Arabia has implemented several measures to boost international tourism. These include tourist visas on arrival and online applications for citizens of multiple countries, and a four-day transit visa introduced in 2023 for pilgrims and event attendees.
In 2023, Saudi Arabia surpassed its tourism targets, attracting over 100 million tourists. The Kingdom aims to be among the top 10 tourist destinations worldwide, reflecting its growing prominence on the global tourism map.
