The amount of 15 percent value added tax (VAT) paid by tourists while purchasing goods and services in Saudi Arabia will be refunded to them upon their departure. The Zakat, Tax and Customs Authority (ZATCA) has made the necessary amendments in the VAT Regulation in this regard. The new VAT exemption came into effect on Friday, April 18.
The authority stated that the amendment stipulates that the rate of VAT will be zero percent on eligible goods and services provided by a service provider to tourists and the imposed VAT amount shall be refunded to the tourists by the service provider at the time of their departure from the Kingdom. According to the amendment, the authority is tasked to authorize one or more approved service providers to provide tax refund facilitation services to tourists.
The ZATCA emphasized that the approved service provider is jointly responsible with the tourist for paying back any amounts proven to have been refunded in violation of the procedures and provisions related to refunds or decisions issued by the authority regarding tax refunds for tourists. Tourists from the Gulf Cooperation Council (GCC) countries will be treated as tourists from outside the GCC in this respect until the implementation of the Electronic Service Law.
The ZATCA authorized its governor to issue the necessary requirements for tax refunds to tourists. These requirements include the requirements and stages of implementing the tax refund mechanism for tourists, additional conditions for considering a natural person as a tourist, goods eligible for refund, requirements for the minimum value of goods eligible for refund, requirements for considering a taxable supplier as an approved supplier, and requirements for submitting refund applications.
In another context, the amendments to the VAT Regulation confirmed that if a taxable person transfers an economic activity to another, the transferee must notify the ZATCA within 30 days of the transfer date, except if the transferor has deregistered.
The authority stipulated that a taxable person whose registration has been de-registeration must retain the required invoices, notices, books, and records. The de-registration of a taxable person does not prejudice their obligation to pay any dues to the authority that precede the date of de-registration.
The authority clarified in the amendments to the Regulation that if the transfer of an economic activity does not meet all the conditions, including notification to the authority of the transfer, and the goods and services that represent the transferred economic activity, shall be considered as a taxable item.
(Saudi Gazette)