Saudi Arabia is poised to revolutionize its tourism sector with the introduction of a Value-Added Tax (VAT) refund system for international visitors, starting in 2025. This groundbreaking initiative, announced in the Kingdom’s budget statement for the upcoming fiscal year, is set to significantly enhance the visitor experience and propel Saudi Arabia’s ambitious tourism targets under its Vision 2030 strategy.
Overseen by the Zakat, Tax, and Customs Authority, the VAT refund system represents a pivotal step towards simplifying tax compliance for international travelers. By streamlining the process of reclaiming VAT on eligible purchases, Saudi Arabia aims to make the country a more attractive and cost-effective destination for tourists from across the globe. This initiative directly addresses a key concern for many international travelers – reducing the overall cost of their trip.
This strategic move aligns perfectly with Saudi Arabia’s ambitious Vision 2030 plan, which prioritizes economic diversification away from oil dependency. The Kingdom has set a bold target of attracting 127 million visitors in 2025, a goal supported by a comprehensive National Tourism Strategy focusing on both domestic and international tourism. The projected SAR 346.6 billion (approximately $92.4 billion USD) in tourism spending under this strategy is expected to create a significant ripple effect, stimulating private sector growth and generating an estimated 1.17 million jobs within the tourism industry.
The success of this approach is already evident in 2024’s remarkable tourism figures. By mid-year, the Ministry of Tourism reported hosting an impressive 59.74 million domestic and international tourists, surpassing expectations. This surge in visitor numbers contributed substantially to non-oil GDP revenues and fueled significant private sector investments in the tourism sector, with SAR 8 billion in investments by August, projected to reach SAR 15 billion by year’s end. Similarly, tourism spending reached SAR 156.6 billion by mid-2024, and projections indicate a significant increase to SAR 304 billion by December.
Further bolstering these achievements, the highly successful Saudi Summer Program 2024 drew 6.9 million visitors and generated SAR 10.5 billion in spending. The Kingdom’s proactive participation in major global travel events, including the Arabian Travel Market in Dubai and IBT in Berlin, also played a crucial role, engaging with 1,025 trade partners and attracting an additional 4.1 million visitors and SAR 21.9 billion in spending. The 2025 budget allocates a substantial SAR 87 billion for the economic resources sector, further underlining the commitment to tourism development and infrastructure improvements.
The upcoming VAT refund system is expected to build upon this momentum, acting as a catalyst for further growth. By reducing travel costs and simplifying financial procedures, it will enhance the overall appeal of Saudi Arabia to international travelers, particularly from high-tourism-outflow regions like Europe and Asia. The system is predicted to not only benefit Saudi Arabia but also potentially influence similar policy adaptations in other Gulf Cooperation Council (GCC) countries, strengthening the region’s collective attractiveness to global tourists. This forward-thinking strategy positions Saudi Arabia as a leader in innovation within the GCC tourism landscape.
The implementation of the VAT refund system is a strategic step that aligns perfectly with Saudi Arabia’s broader vision. Coupled with the significant investments in tourism infrastructure and the ongoing promotional campaigns targeting global travelers, the Kingdom is diligently working towards creating a truly world-class tourism experience. This comprehensive approach is set to solidify Saudi Arabia’s place as a major player in the global tourism industry, welcoming visitors from diverse backgrounds seeking luxury, adventure, culture, and religious experiences.
