A taxable person in Saudi Arabia may claim a refund of excess VAT paid, whether arising from a net tax credit shown on a return or from paying an amount exceeding the tax due, while the Law also provides special refund routes for other categories such as foreign governments, diplomatic missions, charities and tourists.
Refund of Excess Tax for the Taxable Person
The Implementing Regulations provide that a taxable person may claim a refund of excess Tax paid in circumstances including: filing a Tax Return for a Tax Period where Net Tax is an amount due to the Taxable Person, paying an amount in excess of the Tax due, or having a VAT credit balance. A refund request may be submitted when filing the return, or at any other time within five years following the end of the calendar year to which the circumstances relate. Once a refund is approved, the Authority must conclude the refund procedures and initiate payment within sixty (60) days from the date of approval.
Refund of Tax to Designated Persons
The Implementing Regulations allow designated persons not carrying on an Economic Activity, or engaged in a designated economic activity, to apply for a refund of the Tax they incurred on goods and services received in the Kingdom, according to categories set by the Minister of Finance. These categories include: foreign governments, international organizations, diplomatic and consular missions and military entities; charitable organizations, foundations and public-benefit associations; and individuals not engaged in an economic activity or operating in a specific economic sector. The total refund amount must be at least SAR 5,000, and the request must be submitted within six months from the end of the relevant refund period.
Refund of Tax to Tourists
The Authority may authorize one or more providers to carry out a tourist refund scheme facilitating refunds of VAT incurred in the Kingdom by tourists who are not resident in a GCC Member State, on goods purchased in the Kingdom which will not be used there and will be exported outside Council Territory.
Offsetting Refundable Amounts
The Authority has the right to offset any amount refundable to a taxable person against taxes, penalties or any other amounts owed by that person to the Authority under any regulation it administers. Recent amendments to the Implementing Regulations expressly affirmed this right, so as to protect its position regarding other outstanding tax liabilities.
Illustrative Example
If a taxable business's return for a given period shows a net tax credit of SAR 20,000, it may submit a refund request for this amount, and once approved, the Authority must pay it within 60 days — unless the business has other outstanding amounts owed to the Authority, in which case the refundable amount may be offset against them.
Legal References
- IMPLEMENTING REGULATIONS OF THE VALUE ADDED TAX LAW — Article 69 (refund of excess Tax and the 60-day payment deadline).
- Guideline for Amendments to the Implementing — the section on the amendments to Article 70 (categories eligible for refund, the SAR 5,000 threshold and the six-month deadline) and Article 69(5) (offsetting).
- IMPLEMENTING REGULATIONS OF THE VALUE ADDED TAX LAW — the section on the refund of Tax to tourists.
For questions about your specific situation, you can ask the Saudi Arabia Tax & Legislation Helper on Helpers, or consult a licensed chartered accountant.