Saudi Arabia to introduce VAT refund system for tourists in 2025

VAT refund system is to be overseen by Saudi Zakat, Tax, and Customs Authority
An undated image of Value-Added Tax (VAT) logo — DepositPhotos
An undated image of Value-Added Tax (VAT) logo — DepositPhotos

Saudi Arabia is set to introduce a value-added tax (VAT) refund system for tourists in 2025, as part of its efforts to boost tourism and attract more foreign visitors to the country.

This development is a part of Saudi Arabia’s efforts in recent years to become one of the world's top 10 tourist destinations, utilising its rich cultural and religious heritage to establish itself as a global hub for tourism.

VAT refund system for tourists in Saudi Arabia 

According to recent reports from the Saudi news portal, the VAT refund system will be overseen by the Saudi Zakat, Tax, and Customs Authority, which aims to simplify tax compliance and enhance the overall tourism experience.

The VAT refund system will enable foreign tourists to reclaim VAT paid on purchases made during their stay. Certain goods, including vehicles, tobacco products, and food, will be excluded from the refund scheme.

Moreover, it was reported that KSA is targeting 127 million visitors by the end of 2025, with tourism revenues projected to reach SAR 346.6 billion.

This growth is expected to significantly contribute to the national economy by increasing non-oil revenue and driving demand for private sector services.

Furthermore, in recent years, Saudi Arabia has also introduced several measures to attract international tourists, including the launch of a tourist visa system in 2019 and a four-day transit visa in 2022.

Such initiatives have contributed to a significant increase in tourist numbers, with over 100 million visitors recorded in 2023, including 77 million domestic and 27 million international visitors.