Imports that are exempt from VAT under Article 42
Article 38 of the Common VAT Agreement lists the imports that are exempt from Tax. They include the import of Goods whose supply in the final destination country is exempt or zero-rated; imports exempted from customs duty under the Common Customs Law, being diplomatic exemptions, military exemptions, used personal luggage and household appliances brought by citizens residing abroad and foreigners coming to reside for the first time, requisites for non-profit charity organisations exempt under Article 30, and returned Goods; personal luggage and gifts accompanied by travellers as specified by each Member State; and requisites for people with special needs as specified by each Member State.
Article 17 of the VAT Law provides that the Regulations shall determine the terms and conditions required for exempting personal belongings, gifts in the accompanying baggage of travellers and devices for persons with special needs from Tax in accordance with the Unified Customs Law. Article 42 of the Implementing Regulations, headed "Exemptions for Imports", gives effect to that provision.
Personal items and gifts carried by travellers
Article 42(1) provides that imports of personal items and gifts carried in travellers' personal luggage are exempt from Tax, in accordance with the Unified Customs Law and the Customs regulations applying in the Kingdom. The scope of the exemption is therefore determined by reference to the customs rules, rather than by a separate VAT threshold in the Regulations.
Equipment for people with special needs
Article 42(2) provides that imports of equipment for people with special needs shall be exempted from Tax in cases where the equipment is specified in an order issued by the Board of Directors. The exemption is confined to equipment specified in such an order.
Customs-duty exemptions where import tax is paid through the return
Article 42(3) provides that, in cases where a Taxable Person is authorised to pay Tax on imports through their Tax Return, the application of an exemption from Tax on imports on Goods which are exempt from customs duty in accordance with the Unified Customs Law is limited to cases where an import entry has been made with the Customs Department, or an equivalent Department of another Member State, declaring that customs duty was not collectable on their import.
This is a procedural condition. A Taxable Person that accounts for import tax through its return, rather than paying it at the border, can rely on a customs-duty-linked VAT exemption only where the import entry records that customs duty was not collectable.
Reading the Regulations with the Agreement
The Agreement establishes the categories of exempt imports at GCC level, and Article 42 sets the Saudi terms for the categories the Law refers to the Regulations. Importers relying on an exemption should identify the specific basis, in the Agreement or in Article 42, and retain the customs entry or Board order that supports it.
Instruments relied on: VAT Law, Article 17; Common VAT Agreement, Article 38; Implementing Regulations, ninth edition, 26/11/1444H corresponding to 15/6/2023G, unofficial English translation, Article 42 (not amended by ZATCA Board Resolution No. (01-06-24) dated 17/05/1446H, published in the Official Gazette, Umm Al-Qura issue 5082, on 18 April 2025). The Arabic text prevails.