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 on these imported purchases? In this article, we explain in detail everything related to value-added tax when importing from abroad, according to the regulations of the Zakat, Tax and Customs Authority (ZATCA).

What is the value-added tax on imports?

The value-added tax on imports is a tax imposed on goods and commodities entering the Kingdom of Saudi Arabia from abroad. Its rate is 15%, which is the same rate applied to local goods and services. It is collected at customs ports before the release of the goods.

Who pays the import tax?

Any person or company importing goods into Saudi Arabia is obligated to pay the value-added tax upon import, whether they are registered in value-added tax or not, a commercial importer, or an individual importing personal items. The only difference: Companies registered in value-added tax can recover the import tax as input tax in their periodic tax return.

How is value-added tax on imports calculated?

Value-added tax 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, they are also added

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

How is the import tax paid?

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

Goods exempt from value-added tax upon import

There are some goods that are not subject to value-added tax 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 recover value-added tax on imports?

If you are an entity registered in value-added tax, you can recover the import tax you paid under two conditions:

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

You must keep customs release documents (the customs declaration and payment receipt) as proof with 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 value-added tax if your annual income exceeds 375,000 riyals
  • Keep up with updates from the Zakat, Tax and Customs Authority regularly

Frequently Asked Questions

Does an ordinary individual bear the import tax on personal purchases?

Yes, any person importing goods from abroad for personal use pays 15% value-added tax 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 reclaim 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 exempt trade procedures are applied according to the Council’s agreement.