Introduction

Many individuals and companies in Saudi Arabia import goods from abroad, whether they are raw materials, finished products, or even personal items. But do you know how to calculate the value-added tax (VAT) on these imported purchases? In this article, we explain in detail everything related to VAT on imports from abroad, according to the regulations of the Zakat, Tax and Customs Authority (ZATCA).

What is VAT on imports?

VAT on imports is a tax imposed on goods entering the Kingdom of Saudi Arabia from abroad. Its rate is 15%, the same rate applied to local goods and services. It is collected at customs checkpoints before the release of the goods.

Who pays import tax?

Any person or company importing goods into Saudi Arabia is obligated to pay VAT at import, whether registered in VAT or not, a commercial importer or an individual importing personal items. The only difference: Companies registered in VAT can reclaim import VAT as input tax in their periodic tax return.

How is VAT on imports calculated?

VAT on imports is calculated based on the customs value of the goods, which consists of:

  • Cost of goods (FOB): The value of the goods according to the commercial invoice
  • Shipping and insurance costs: Added to the value of the goods (CIF)
  • Customs duties: If the goods are subject to customs duties, these are also added

Illustrative example: If the value of the goods is 10,000 SAR, shipping is 1,000 SAR, insurance is 500 SAR, and customs duties are 5% (500 SAR), then the tax base = 12,000 SAR, and the VAT due = 12,000 × 15% = 1,800 SAR.

How is import tax paid?

The tax payment process is done through the Fasah electronic system, which is the national unified platform for cross-border trade. The importer or customs broker submits the customs declaration electronically, which includes the calculation of taxes and fees, and then the payment is made electronically before the release of the shipment.

Goods exempt from VAT on import

There are some goods that are not subject to VAT upon import:

  • Exports: Goods exported outside the Kingdom
  • Some medicines and medical supplies: Exempt under the tax system
  • Precious metals: Gold, silver, and platinum when purchased for investment
  • Personal luggage of travelers: Within the limits of the prescribed exemption
  • Gifts and commercial samples: With limited values according to customs regulations

How to reclaim VAT on imports?

If you are an entity registered in VAT, you can reclaim the import VAT you paid under two conditions:

  1. The imported goods must be used in your taxable commercial activity
  2. You must submit a periodic tax return that includes the import VAT as input tax

You must keep customs release documents (the customs declaration and payment receipt) as proof for the Authority.

Important tips for importers

  • Calculate the tax in advance before importing to avoid surprises
  • Use an accredited customs broker to facilitate procedures
  • Keep all shipping invoices, insurance documents, and customs data
  • If you are a company, register for VAT if your annual income exceeds 375,000 SAR
  • Stay updated with the Zakat, Tax and Customs Authority’s latest regulations

Frequently Asked Questions

Does an ordinary individual bear import tax on personal purchases?

Yes, any person importing goods from abroad for personal use pays 15% VAT upon the goods entering the Kingdom, and it is calculated on the total value.

Including shipping and insurance.

Does the import tax include customs duties?

Yes, customs duties are added to the taxable value before calculating value-added tax.

Can goods imported for factories be exempt from tax?

Not a full exemption, but factories registered in value-added tax can recover the tax paid upon import as input tax in their tax return.

What is the allowed period for paying import tax?

The tax must be paid before the release of the goods from the customs port. Delay results in fines and delays in the release of the shipment.

Does the percentage differ if the import is from GCC countries?

Goods imported from Gulf Cooperation Council countries are subject to the same rules and 15% rate, unless they originate from one of the Council’s countries and the exempt trade procedures are applied according to the Council’s agreement.