Saudi Arabia: VAT Refund Procedures for Non-Residents

In compliance with the regulations outlined in Articles 70 and 72 of Saudi Arabia's VAT Implementing Regulations, individuals who are eligible and not engaged in any economic activities within the kingdom can seek a refund for Value-Added Tax (VAT) incurred while in the country. 

In February 2023, the Zakat, Tax, and Customs Authority (ZATCA) introduced comprehensive guidelines outlining the VAT refund process for non-residents in Saudi Arabia. Alongside this, they also launched an online portal to streamline the application submission process. 

Eligibility Requirements:

Non-resident entities that do not engage in any economic activities within Saudi Arabia are eligible to register as eligible persons for submitting VAT refund applications pertaining to expenses incurred in the country.

Conditions for Eligibility:

1. The non-resident entity must be established in a jurisdiction with a tax system similar to Saudi Arabia's.
2. The entity should be registered under that tax system with the relevant tax authority.
3. The non-resident entity's home jurisdiction must allow for a comparable refund mechanism to seek VAT refunds for entities in Saudi Arabia incurring VAT within its borders.

Additional Eligible Parties:

ZATCA extends eligibility for VAT refunds to designated entities such as foreign governments, international organizations, diplomatic missions, and consular bodies that are not engaged in economic activities within Saudi Arabia.

Key Considerations:

1. Access to a Saudi bank account is necessary for processing VAT refunds.
2. Conducting a thorough analysis of Permanent Establishment Risk is advisable before submitting a refund request to ensure compliance with tax regulations.

The deadline for submitting input VAT refund requests for the calendar year 2023 is set for 30 June 2024.

SOURCES:

• https://kpmg.com/sa/en/home/insights/2024/02/tax-alert-reminder-for-submission-of-vat-refund-claims-by-non-residents.html
• VAT-Refund-GCC.pdf (zatca.gov.sa)