RIYADH: In a strategic move to enhance its tourism sector, Saudi Arabia plans to implement value-added tax (VAT) refunds for international visitors in 2025, signaling a commitment to creating a more attractive destination for global travelers.
The budget announcement comes as part of the Zakat, Tax and Customs Authority’s broader economic approach, aligning with the Kingdom’s ambitious Vision 2030 economic diversification plan. Revenue from taxes on goods and services is projected to reach approximately 280 billion riyals, representing a 6.6% increase driven by growth in non-oil activities and improved consumption indicators.
Saudi Arabia’s tourism sector has shown remarkable momentum, achieving significant milestones in 2024. According to the Ministry of Tourism, the country topped the G20 in international tourist growth, welcoming 5.17 million foreign visitors—a substantial 73% increase compared to pre-pandemic 2019 levels.
The VAT refund initiative is part of a larger strategic framework aimed at transforming Saudi Arabia into a global tourism destination. The national tourism strategy sets an ambitious target of attracting 150 million tourists by 2030, supported by major development projects like the Red Sea and Qiddiya initiatives, and international events such as Expo 2030.
Key economic objectives include:
> Creating 6.1 million new jobs in the tourism sector
> Increasing tourism’s contribution to GDP to 10% by 2030
> Providing more competitive and traveler-friendly tax policies
The tax landscape in Saudi Arabia has undergone significant transformation since 2018, when VAT was first introduced at 5% and subsequently raised to 15% in 2020. The proposed tourist VAT refund program represents another innovative step in the Kingdom’s economic evolution.
By offering tax refunds, Saudi Arabia aims to position itself as an increasingly attractive destination for international travelers, further supporting its vision of economic diversification beyond oil revenues.