Value Added Tax — VAT — is one of
the most important financial realities
of daily life for expats in Saudi Arabia.
Introduced in 2018 at 5% and then
raised to 15% in 2020, Saudi Arabia's
VAT now applies to the vast majority
of goods and services that expats
buy every single day — from groceries
and restaurant meals to electronics,
clothing, rent and utilities.
Understanding exactly what is taxed,
what is exempt and how VAT affects
your monthly budget is essential
for every expat in the Kingdom.
And for those planning to visit
Saudi Arabia or receive family
visitors, a brand new tourist
VAT refund program launched in
2025 offers a genuine way to
reclaim some of that 15%.
In this complete guide, we explain
everything expats need to know about
VAT in Saudi Arabia in 2026 — from
what is taxed and what is exempt
to the tourist VAT refund process,
smart shopping strategies and the
impact of VAT on your overall
cost of living.
What is VAT and How Does it Work in Saudi Arabia?
VAT is a consumption tax added at
each stage of the supply chain.
In Saudi Arabia, the current VAT
rate is 15% — one of the higher
standard VAT rates in the world.
This rate applies to most goods
and services sold in the Kingdom.
VAT is administered and collected
by the Zakat, Tax and Customs
Authority (ZATCA), the official
Saudi government body responsible
for all tax matters in the Kingdom.
The 15% VAT rate applies to
businesses with annual revenues
above SAR 375,000. Businesses
with revenues between SAR 187,500
and SAR 375,000 must register
but may be exempt from collection
in some categories. Most expat
shopping at major retailers,
malls, supermarkets and restaurants
involves fully VAT-registered businesses.
For context on how VAT affects
your overall monthly budget in
Saudi Arabia, see our complete
Cost of Living in Saudi Arabia 2026 guide
for a realistic breakdown of
what expats spend each month.
What Does Saudi Arabia's 15% VAT Apply To?
VAT at 15% applies to the overwhelming
majority of goods and services that
expats encounter in daily life in
Saudi Arabia.
Goods Subject to 15% VAT
Electronics and appliances
(phones, laptops, TVs,
fridges and washing machines)
Clothing, footwear and accessories
Furniture and home furnishings
Perfumes, cosmetics and personal
care products
Jewelry and watches
Toys and sports equipment
Cars and vehicle parts
Imported goods of all kinds
Books, stationery and office supplies
Services Subject to 15% VAT
Restaurant meals and cafe purchases
Hotel accommodation
Entertainment tickets (cinemas,
theme parks, concerts and events)
Gym memberships
Telecommunications services
(mobile phone plans and internet)
Insurance premiums
Professional services (legal,
accounting and consulting fees)
Rent for commercial property
Maintenance and repair services
VAT on Remittance Service Fees
The 15% VAT applies to the
service fee charged by money
transfer companies and banks
for remittance transactions.
Importantly, VAT applies only
to the service fee — not to
the total amount being transferred.
For more details on managing
remittance costs, read our guide
on
sending money from Saudi Arabia to Bangladesh 2026.
What is Exempt from VAT in Saudi Arabia?
Not everything in Saudi Arabia
carries the 15% VAT. Several
important categories are either
zero-rated or fully exempt.
Zero-Rated Supplies (0% VAT)
Zero-rated means VAT applies
in principle but at a rate of 0%.
The supplier still files VAT returns
but charges nothing to the customer.
Exports of goods outside Saudi Arabia
International transport services
Medicines and medical equipment
(prescribed medications and
most medical devices)
Qualifying financial services
in certain circumstances
Exempt Supplies (No VAT)
Residential property rental —
rent paid for a residential apartment,
villa or room is VAT-exempt for
tenants. This is one of the
most significant exemptions
affecting expat households
in Saudi Arabia. Your monthly
rent does not carry VAT.
Bare land sales and purchases
Local passenger transport
(taxis, ride-hailing services
and domestic public transport)
Life insurance and reinsurance
How VAT Affects Expat Daily Life in Saudi Arabia
Understanding where VAT hits
hardest helps you budget more
accurately and make smarter
spending decisions.
Grocery Shopping
Basic food items including fresh
vegetables, fruits, grains, meat,
poultry and fish are zero-rated
in Saudi Arabia — meaning no VAT
is charged on most essential groceries.
However, processed foods,
packaged snacks, soft drinks,
luxury food items and imported
specialty products typically
carry the full 15% VAT. When
shopping at major supermarkets
like Carrefour, Tamimi, Lulu
or HyperPanda, always check
your receipt to see which
items carried VAT.
Dining Out
Restaurant meals carry the full
15% VAT. This applies to all
restaurants from local shawarma
shops to fine dining establishments.
When budgeting for dining out,
always add 15% on top of the
listed menu price to calculate
your actual total.
A SAR 100 dinner for two becomes
SAR 115 with VAT. A SAR 300
family dinner becomes SAR 345.
Over a month of regular dining
out, this adds up to a meaningful
additional cost.
Electronics and Technology
Electronics carry the full 15% VAT.
This is particularly relevant when
purchasing smartphones, laptops,
tablets, TVs and other devices in
Saudi Arabia. Always factor VAT
into your electronics budget.
However, Saudi Arabia's overall
electronics prices before VAT
are often competitive with
global prices — and for some
categories, total after-VAT
prices remain reasonable
compared to many countries
with higher overall tax burdens.
Utilities and Services
Electricity and water bills
for residential properties
in Saudi Arabia typically
carry VAT on the service
fees and consumption above
certain subsidized limits.
Mobile phone plans and home
internet services carry 15% VAT.
This is reflected in your
monthly bill.
The Saudi Arabia Tourist VAT Refund Program 2026
One of the most significant
VAT developments in Saudi Arabia
in recent years is the launch
of the tourist VAT refund program.
In a move aligned with Vision 2030,
Saudi Arabia officially launched
a VAT refund program for tourists
and GCC nationals in April 2025.
The initiative allows eligible
travelers to reclaim the 15% VAT
on qualifying purchases made at
registered retail outlets across
the Kingdom.
Who is Eligible for the Tourist VAT Refund?
To qualify, the person must not be
a Saudi citizen or have permanent
residence in Saudi Arabia. The buyer
must be 18 years or older at the
time of purchase. The items must be
bought from certified stores for
tax-free shopping. The goods must
be for personal use, not commercial.
Items must remain in original packaging
and must be in the tourist's personal
luggage upon departure. The time
between purchase and departure
must not exceed 90 days.
Important for expats: Resident
expats with a valid Iqama are
considered residents of Saudi Arabia
and are not eligible for the
tourist VAT refund. This refund
is specifically for tourists
and non-resident visitors.
However, if you have family
members visiting you from
Bangladesh or another country
on a tourist or family visit visa,
they may be eligible for the
VAT refund on qualifying purchases
made during their visit.
What Purchases Qualify for the VAT Refund?
You can reclaim VAT on goods
bought for personal use including
clothing, electronics, accessories,
perfumes, jewelry and gifts.
They need to be unused and taken
out of the country within 90 days.
What is NOT eligible for the refund:
Hotel accommodation and services
Restaurant and cafe meals
and beverages
Any goods consumed or used
inside Saudi Arabia
How to Claim the Tourist VAT Refund — Step by Step
The VAT refund process is divided
into three main stages: in-store
shopping, departure verification
at the airport, and refund issuance.
Step 1: Shop at ZATCA-Approved Stores
Tourists must shop at ZATCA-approved
retail outlets. Eligible outlets are
typically marked with Tax Free or
VAT Refund Available signage.
Not all stores are enrolled in
the program.
Step 2: Request Your VAT Refund Form
Present your passport or GCC national
ID to the store staff before completing
your purchase so the transaction can
be linked to your official document
number. A Tourist Tax Refund Invoice
will be issued for the refund process.
Minimum spend requirement:
The minimum total purchase must
exceed SAR 500. Up to three invoices
from the same retailer on the same
day may be combined to meet the
SAR 500 threshold.
Step 3: Verify at the Airport Before Departure
When leaving the country, look for
a Global Blue self-verification kiosk
at the airport to submit your tax
refund request and validate your
tax-free shopping form before departing.
VAT refund counters are available
at King Khalid International Airport
in Riyadh with 10 counters, King
Abdulaziz International Airport
in Jeddah and King Fahd International
Airport in Dammam.
Step 4: Receive Your Refund
The refund is processed after
verification at the airport counter
or Global Blue kiosk. Refunds can
typically be received as cash or
credited to a credit or debit card.
Smart Shopping Tips for Expats in Saudi Arabia 2026
Always Check the VAT-Inclusive Price
Many stores in Saudi Arabia display
prices exclusive of VAT with the
15% added at the till. Always
confirm whether the displayed
price is VAT-inclusive or
exclusive before making a
purchase decision — especially
for large ticket items like
electronics or furniture.
Shop During Saudi National Day and Founding Day Sales
Saudi Arabia's major national
celebrations — Saudi National Day
(23 September) and Saudi Founding Day
(22 February) — are accompanied by
nationwide retail sales and discounts
of up to 50% to 70% at major malls
and online retailers. These are
the best times to make large
purchases.
Use Price Comparison Apps
Apps like Noon, Amazon.sa and
Jarir Bookstore's online platform
allow you to compare prices
across retailers before buying.
Online prices are often lower
than in-store prices even
after VAT.
Keep All Receipts
Always keep your VAT receipts
for business expenses and
large purchases. VAT receipts
are required for any business
expense claims and are useful
records of your spending
for budgeting purposes.
Budget for VAT on All Service Bills
When calculating your monthly
budget for services — gym,
mobile, internet, dining —
always add 15% to the
advertised rate to get
your true monthly cost.
Understanding Your VAT Receipt in Saudi Arabia
Every valid VAT receipt in
Saudi Arabia from a registered
business must include:
The supplier's name and
VAT registration number
The date of supply
A description of the
goods or services
The VAT-exclusive price
The VAT amount charged
(at 15%)
The total VAT-inclusive price
If a retailer does not provide
a proper VAT receipt, you can
report this to ZATCA through
their official website at
zatca.gov.sa.
Frequently Asked Questions About VAT in Saudi Arabia
Does VAT apply to residential rent for expats?
No. Residential property rental
is VAT-exempt in Saudi Arabia.
Your monthly apartment or villa
rent does not carry VAT regardless
of the amount. However, commercial
property rent does carry 15% VAT.
Does VAT apply to my monthly salary in Saudi Arabia?
No. Saudi Arabia has no personal
income tax and VAT does not apply
to employment income. Your salary
is paid to you in full with no
deductions for income tax or VAT.
Can expat residents claim the tourist VAT refund?
No. Resident expats with a valid
Iqama are considered Saudi residents
and are not eligible for the tourist
VAT refund program. The refund
is exclusively for tourists and
non-resident visitors.
Are medicines and healthcare subject to VAT?
Prescription medicines and most
qualifying medical equipment are
zero-rated in Saudi Arabia —
meaning they carry 0% VAT.
However, some over-the-counter
health products and supplements
may carry the standard 15% VAT.
For more on managing healthcare
costs, read our complete guide
on
health insurance for expats in Saudi Arabia.
What is ZATCA and how do I contact them?
ZATCA is the Zakat, Tax and
Customs Authority — the official
Saudi government body that
administers VAT, customs and
zakat. Their official website
is
zatca.gov.sa and they
operate a call center at
19993 for VAT inquiries.
Useful Official Resources
ZATCA — Zakat, Tax and Customs Authority
Website:
zatca.gov.sa
Saudi VAT Refund for Tourists (National Portal)
Website:
my.gov.sa
Global Blue VAT Refund Saudi Arabia
Website:
globalblue.com
Final Thoughts on VAT for Expats in Saudi Arabia 2026
VAT is a permanent and significant
part of the financial landscape
for every expat living in Saudi
Arabia. At 15%, it is higher than
many expats expect and it affects
most daily spending outside of
residential rent and basic food.
The key to managing VAT effectively
is building it into your monthly
budget from the start, knowing
which categories are exempt and
taking advantage of major national
sales events for large purchases.
For visitors to your home in Saudi
Arabia, the tourist VAT refund program
launched in 2025 is a genuinely useful
benefit — encourage your family
visitors to shop at ZATCA-approved
stores and claim their 15% back
before they fly home.
For more on managing your
finances as an expat in Saudi Arabia,
read our guides on the
Saudi Arabia Salary Guide 2026 and
end of service gratuity
to make the most of your
Saudi earnings.
Have questions about VAT
in Saudi Arabia? Leave a comment
below and we will be happy
to help!
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