How VAT Refund Schemes in Saudi Arabia Compare with UAE & Other GCC Countries?

Value Added Tax (VAT) is now a regular part of doing business across the Gulf, with countries such as Saudi Arabia, the UAE, Bahrain, and Oman implementing VAT under the GCC VAT framework. Although the core concept of VAT is the same, VAT refund rules vary from country to country, making it important for businesses involved in exports, cross-border trade, or regional operations to understand these differences. Knowing how the VAT refund Saudi Arabia system compares with the VAT refund UAE and the UAE VAT refund scheme can help businesses improve cash flow, avoid delays, and stay compliant. In this blog, we explain in simple English how VAT refunds work in Saudi Arabia, how the UAE VAT refund scheme operates, the key differences across GCC countries, and practical tips to help businesses avoid common mistakes when claiming VAT refunds. 

VAT Refund Basics in Saudi Arabia     

In Saudi Arabia, VAT is overseen by the Zakat, Tax and Customs Authority (ZATCA), and VAT-registered businesses can claim a VAT refund in Saudi Arabia when the VAT they pay on business expenses is higher than the VAT they collect from customers. This typically happens for companies involved in exports, international services, or major capital investments, where input costs are high and many supplies are zero-rated. However, the Saudi VAT refund process is not automatic—ZATCA carefully reviews refund claims to ensure they fully comply with VAT laws, making accurate filings and proper documentation essential for a successful refund. 

How the VAT Refund Process Works in Saudi Arabia     

Most VAT refunds in Saudi Arabia arise in the following situations: 

• Exports of goods outside the GCC, which are zero-rated for VAT
• Zero-rated international services are provided, provided the legal conditions are met
• Businesses with high operational or capital expenses, especially during early stages or expansion   
   

Unlike some countries, VAT refunds in Saudi Arabia are not automatically paid in cash. Instead, ZATCA follows a structured review process:   

• The VAT return showing a refundable balance is carefully reviewed
• ZATCA may carry forward the refundable amount to offset future VAT liabilities
• A cash refund is issued only after verification and approval

Who Is Eligible for a VAT Refund in Saudi Arabia     

To qualify for a ZATCA VAT refund, a business must meet specific eligibility conditions, including: 

• Making taxable or zero-rated supplies, such as exports
• Ensuring that the VAT claimed relates only to taxable business activities
• Submitting accurate VAT returns on time with no outstanding compliance issues   
   

It is important to note that input VAT linked to exempt supplies such as certain financial or residential activities, is not recoverable under Saudi VAT law. 

Documentation & Compliance Requirements     

Saudi Arabia has one of the strictest VAT compliance frameworks in the GCC. To support a successful VAT refund claim in Saudi Arabia, businesses must maintain complete and accurate records, including:   

• VAT-compliant tax invoices that meet ZATCA requirements
• Export documentation, such as customs exit evidence, proving goods left Saudi Arabia
• Accounting records aligned with Saudi e-invoicing (FATOORA) regulations   
   

Failure to provide proper documentation is one of the most common reasons for VAT refund delays, rejections, or audits by ZATCA. 

Why Proper VAT Refund Management Matters     

Because ZATCA closely reviews refund claims, businesses that do not follow the correct Saudi VAT refund process may face:   

• Delayed refunds
• Increased audit risk
• Cash flow challenges   
   

Ensuring accurate filings, strong documentation, and full compliance significantly improves the chances of receiving VAT refunds smoothly and on time. 

VAT Refund Scheme in the UAE   

The VAT refund scheme in the UAE, administered by the Federal Tax Authority (FTA), is widely regarded as one of the most business-friendly systems in the GCC due to its strong focus on digital filing, clear regulations, and faster processing times. For businesses operating in or trading through the UAE, understanding how the UAE VAT refund scheme works can help improve cash flow, avoid refund delays, and reduce unnecessary VAT costs while staying fully compliant with FTA requirements. 

How VAT Refund Works in the UAE     

Under the FTA VAT refund process, businesses can apply for a VAT refund in the UAE when the VAT paid on business expenses (input VAT) is more than the VAT charged to customers (output VAT) during a tax period. 

This situation usually happens in the following cases:   

• When a business is engaged in exports, which are treated as zero-rated supplies under UAE VAT law
• When a company provides zero-rated goods or services, such as certain international services
• When a business incurs high start-up or capital costs, including office setup, machinery, equipment purchases, or large-scale projects   
   

In such cases, the extra VAT paid does not need to remain stuck with the business. Instead, it can be reclaimed through the UAE VAT refund scheme by filing a VAT return that shows a refundable balance via the FTA online portal. 

Special VAT Refund Schemes in the UAE     

One of the biggest strengths of the UAE VAT refund scheme is that it offers special VAT refund options that many other GCC countries do not currently provide. These schemes are designed to support tourism, global trade, and foreign investment, making the UAE a preferred business and travel hub. 

VAT Refund for Tourists       

Under the VAT refund UAE system, eligible tourists can claim back VAT paid on goods purchased during their stay in the country. This refund applies to qualifying retail purchases and is processed through approved refund operators, helping make shopping in the UAE more attractive to international visitors.   

VAT Refund for Foreign Businesses       

The UAE also allows foreign businesses that are not VAT-registered in the UAE to recover VAT incurred on eligible expenses. Under this part of the FTA VAT refund process, non-resident companies can claim VAT on costs such as accommodation, exhibitions, and business-related services, provided specific conditions are met.   

Documents Required for UAE VAT Refund     

To successfully claim a VAT refund in the UAE, businesses must ensure that all supporting documents are accurate, complete, and fully compliant with Federal Tax Authority (FTA) requirements. Proper documentation plays a key role in avoiding delays or rejection of refund claims. 

The main documents required under the UAE VAT refund scheme include: 

• VAT-compliant tax invoices that meet all UAE VAT regulations, including supplier details, VAT registration numbers, and correct VAT amounts
• Proof of exports or other supporting evidence for zero-rated transactions, such as customs declarations, shipping documents, or delivery confirmations
• Correct and complete VAT returns, filed on time through the official FTA VAT portal, showing a refundable VAT position  
   

Although the FTA VAT refund process is largely digital and designed to be user-friendly, refund claims are often delayed due to incorrect invoices, missing export documents, or reporting errors. Maintaining clear records and double-checking VAT filings can significantly improve the chances of a smooth and faster refund process.   
 

UAE VAT Refund Timelines     

The VAT refund UAE process is generally faster and more predictable compared to other GCC countries, making the UAE VAT refund scheme more business-friendly. Once a VAT return showing a refundable position is submitted through the FTA VAT refund process, refunds are typically processed within a shorter review cycle if the Federal Tax Authority does not raise queries, request additional documents, or initiate an audit. However, large VAT refund claims or frequent refund requests may still be subject to additional checks, which is why maintaining accurate VAT records, compliant tax invoices, and strong VAT compliance is essential to avoid delays and ensure timely refunds. 

How Saudi Arabia’s VAT Refund Compares with UAE & Other GCC Countries   

Although VAT was introduced across GCC countries under a common framework, VAT refund rules vary significantly in practice. Businesses operating in Saudi Arabia, the UAE, and other Gulf countries often face differences in eligibility criteria, documentation requirements, approval timelines, and administrative processes, which can directly affect how and when refunds are received. Understanding these differences is essential for effective VAT return planning and better cash flow management across the region. 

Eligibility Differences Across GCC Countries     

VAT Refund in Saudi Arabia     

Saudi Arabia takes a careful and rule-focused approach when it comes to VAT refunds. The tax authority, ZATCA, closely checks every refund request, especially when the amount is large or related to exports. 

In practice, this means:    

• Refund claims go through strict verification
• Businesses must be fully prepared for audits
• All invoices and supporting documents must be accurate and complete
• Refunds are sometimes delayed or used to adjust future VAT payments instead of being paid immediately   
   

VAT Refund in the UAE     

The UAE VAT refund scheme is generally seen as more flexible and business-friendly, particularly for exporters and foreign companies operating in the country. 

Key points of the UAE system include:   

• Wider VAT refund options for businesses
• Easier VAT recovery on exports and zero-rated supplies
• Separate refund schemes for foreign businesses and tourists

Exports, International Services & Free Zones     

Both Saudi Arabia and the UAE allow VAT refunds on qualifying exports, but the evidence required differs. 

Saudi Arabia     

• Requires strong customs and exit documentation
• Greater scrutiny of export transactions
• Limited special VAT treatment for free zones

UAE     

• Places more emphasis on commercial, shipping, and logistics documents
• Offers special VAT treatment for designated zones, particularly for goods
• Easier VAT recovery for businesses operating in or through free zones

Process & Administration: Saudi Arabia vs UAE     

VAT Refund Timelines Across GCC Countries     

• UAE: Generally faster VAT refund processing and more business-friendly timelines   
• Saudi Arabia: Refunds often take longer due to additional checks, validations, and audits   
• Bahrain & Oman: VAT refunds are available, but processing times can be longer and less predictable as these systems continue to mature

Conclusion   

Although VAT systems across the GCC follow a common framework, the VAT refund process in Saudi Arabia and the UAE differs in practice, especially when it comes to compliance, timelines, and documentation. Saudi Arabia’s VAT refund approach is more detailed and compliance-focused, while the UAE VAT refund scheme is faster and more digital. For businesses operating across multiple Gulf countries, understanding these differences is essential to improve cash flow, avoid refund delays, and remain fully compliant with local VAT regulations. With the support of Reyson Badger ’s VAT advisory services in Saudi Arabia and VAT services in the UAE, businesses can confidently manage VAT refunds, ensure accurate filings, and maximize recovery through reliable VAT refund services across the GCC.