Hajj and Umrah pilgrims can take refund of VAT paid on the Airport

Saudi Arabia attracts one of the highest numbers of tourists in form of pilgrims from around the world. According to stats, Saudi Arabia is able to attract around 6.75 million pilgrims annually for Umrah. This is an annual increase of 6% compared to the last year.

This makes Saudi Arabia attract the highest number of tourists in the year 2017. This means that the pilgrims who visit Saudi Arabia pay a huge amount of Value Added Tax (VAT) as they visit and shop during their stay.

The question then arises what is VAT and what importance does it hold for the economy of the country? VAT is value added tax is categorized as consumption tax that is to be paid by the consumer. VAT is the tax that is added at each stage of production as some value is added at each stage.

VAT is also levied at the point of retail sale.  In simpler terms, it can be defined as the amount paid by the buyer less cost of materials used in the manufacturing of the product. VAT is used as a finance tool in more than 160 countries around the globe.

In a recent conference that was conducted The General Authority of Zakat and Tax (GAZT), which manages the implementation of VAT in Saudi Arabia, is considering to reimburse the amount of VAT that Hajj and Umrah pilgrims and other visitors from non-Gulf Countries pay. 

Actually, the concept of the VAT is that it is applied to the goods and services provided within the country. If there is any good or service exported from the country, there is no value added tax on it.

That’s the reason, visitors and pilgrim would be able to claim a rebate on VAT paid within Saudi Arabia as they would be taking the goods out of the Kingdom.

The non-Gulf Cooperation Council countries would be able to claim a rebate of the amount paid as Value Added Tax on their purchases made in the Kingdom.

The process of claiming back the value-added tax paid on the goods you are carrying away from the country is applicable in all the countries wherever VAT is applicable.

The GAZT is considering make some arrangements to pay back the VAT amount to the visitors and pilgrims, one of the suggestions made is opening up rebate offices at airports and land borders of non-Gulf countries.

In pursuit of these changes, a list of service providers will be provided so that visitors can contact those service providers for reimbursement at ease. Applications should be submitted by visitors and pilgrims from non-GCC countries.

Unconsumed Goods: A spokesperson from GAZT, however, made clear that in order to be exempted from VAT the exempted parties should not use the goods and services within the Kingdom.

It has been reported that 83,000 companies have been registered in the VAT system established by GAZT till date. Other companies that have not been registered as yet have been issued warnings and will be heavily fined in the future.

Source: Saudi Gazette

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