Saudi Arab to raise VAT to 15%: What does this mean for online shoppers?

Saudi Arab to raise VAT to 15%: What does this mean for online shoppers?

The Kingdom of Saudi Arabia has taken a big decision to implement an increase in Value Added Tax. The VAT in KSA on inbound shipments or products was previously 5% of the total declaration of a shipment. Now, the Kingdom has decided to increase it up to 15%, coming in effect from 1st July, 2020.

Let’s break it down for our KSA customers

KSA has a vast online shopping enthusiast base, which all sit in the comfort of their homes, especially in these critical times and enjoy shopping and shipping their favorite online US products from tech products to wardrobe and shoes. In this blog, we’ll try to understand how this decision will affect the Arab shoppers who love US online products.

Understanding VAT

One of the most frequently asked questions by Saudi customers right now is: what is VAT? VAT or Value Added Tax is a consumption tax placed on a product whenever value is added at each stage of the supply chain, starting off from production to the point of sale (the customer). The amount of VAT is the money that the end user pays added to the cost of the product, which does not include the cost of the materials. In easier terms, VAT is added to the price after the product comes out of its production till the point it reaches to the final customer.

Why has Saudi Arab increased its VAT?

There are several factors as to why Saudi Arabia has decided to increase its Value Added Tax by such a significant percentage. The basic reason behind the increase is the Covid-19 economic meltdown that the whole world is facing. Economies around the world are suffering at the hands of the pandemic which has set the world back for years. VAT collection is one of the effective methods to stabilize this deficit. Since KSA has increased VAT, it is yet to be seen which countries will follow suit.

What does it mean for online shoppers

For online shoppers from KSA, this may sound like a bit of adverse news. It means that the product you’re purchasing off your favorite US online stores will cost 10% more of what it did previously. All products being shipped into Saudi Arabia will cost more to the end user, with the VAT being added by the Saudi government.

Why should you still purchase it online:

Pertinent to note: VAT is added to ALL products. So your local market is still going to have the same prices for your product with the amount of extra VAT. While you can go buy it from your local shopping point, it’s much safer and logical to have it delivered to your doorstep, especially in the current circumstances where you NEED to stay home! The same product, at the same price, but at your doorstep because delivery heroes are still operating everywhere in the world!

The hack around it:

It’s not all bad though; ever since the pandemic hit the world, US online stores have put up a wide range of products on amazing discounted prices. All you need to do is find the right promotion and it won’t affect you one bit! Starting from eBay, one of the world’s largest stores to find anything and everything, to the global household name Amazon; all of these US stores have been catering to their customers, helping out with discounts and that’s a great comfort for KSA online shoppers!

Which international shipping services are charging VAT before-hand?

So, Aramex is the only international shipping service that charges the VAT upon the transaction, i.e: your product price is charged including your VAT and the rest of the custom charges are levied upon arrival in your home country. Apart from Aramex, all your favorite shipping services including DHL, UPS, Express etc exclude the taxes from the cost and the end user has to bear them according to the shipment, local laws and custom regulations.

How will global shopaholics help you out

If you’re already a KSA based online US shopper, you know that you need to select an international shipping service to bring you your product, after you’ve made your pick of the products. Global Shopaholics takes its customers through the process conveniently, from picking out your products to consolidating all your products in a box, Global Shopaholics is your guide to all your online shopping needs. Here at Global Shopaholics, we keep our tens of thousands of clientele family aware of discount deals and promotions through our social media at all times. Also, our consolidation deals and international shipping discounts make up for any price hikes! Click and shop to send your product to your free US shipping address, so we can bring your favorite product home to you! Happy Shopping, stay safe!

 

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