Saudi VAT Refund Scheme Poised to Boost Tourism and Retail Spending

Asharq Al-Awsat

23-04-2025

Saudi Arabia's recent decision to allow foreign tourists to reclaim value-added tax (VAT) on eligible purchases is expected to significantly enhance the Kingdom's appeal as a global tourist destination, while giving a strong boost to retail and non-oil economic sectors.
The policy follows amendments to the executive regulations of the VAT law, approved by the Board of Directors of the Zakat, Tax, and Customs Authority. Effective April 18, international visitors are now eligible to reclaim the 15% VAT on goods purchased in Saudi Arabia, provided the items are for personal use and not consumed within the country. Refunds can be processed at departure points through designated service providers.
The move comes amid Saudi Arabia's continued efforts to diversify its economy under Vision 2030. The Kingdom recorded more than 30 million foreign visitors in 2024, and international tourist spending reached a record SAR154 billion (USD41 billion), a 14% increase compared to the previous year.
Tax expert Ali Al-Nasser told Asharq Al-Awsat that the VAT refund initiative marks a pivotal step toward positioning Saudi Arabia as a competitive tourism hub. 'Lowering the effective cost of shopping by 15% creates a powerful incentive for visitors to spend more. This will not only stimulate retail activity but also encourage businesses to improve services and tailor promotions to tourists,' he said.
Al-Nasser advised tourists to keep tax invoices from participating retailers and ensure purchases are unused before departure. Refunds do not apply to services such as accommodation, food and beverages, tobacco products, or vehicle purchases. He also emphasized that refunds must be requested at the point of exit through officially approved channels.
Experts anticipate that the new system will lead to a 15-20% rise in tourist arrivals in the coming years, driven by the added value and improved visitor experience. Al-Nasser also expects a 10-15% increase in average spending per tourist, especially as awareness of the refund system grows.
Mohammed Al-Abdulkarim, a tourism expert, called the VAT refund scheme a 'strategic step' that aligns with Saudi Arabia's tourism ambitions. 'Allowing tax refunds makes Saudi Arabia more competitive with other global destinations, particularly for shopping tourism,' he said. 'It enhances visitor satisfaction and encourages both longer stays and repeat visits.'
Al-Abdulkarim urged tourists to retain receipts and provide passport information at the point of sale. He added that refunds can be issued either in cash or via electronic payment at the airport before departure.
Beyond tourism, the VAT refund program is expected to have a broader economic impact. Increased tourist spending will benefit retail outlets, while related sectors such as transport and hospitality are likely to see indirect gains.