Customs duty rates have recently increased across the Kingdom
17 June 2022 - The Kingdom of Saudi Arabia’s (KSA) Minister of Finance has issued a ministerial decree no.59334 dated 10/11/1443 AH (corresponding to 9 June 2022), increasing the customs duty rates for 99 products, primarily focusing on foodstuffs, beverages, industrial and agricultural products. As communicated in the ministerial decision, this is aimed at stimulating and protecting local industries and agricultural products.
The newly increased duty rates range from 5.5% to 25% and will take effect from 12 June 2022. The full list of impacted commodities, currently available in Arabic, is available on the following link.
Additionally, it is worth noting that in June 2020, an increase in customs duty rates was implemented which had a widespread impact across various sectors of the economy with a general increase in customs duty rates from 5% to 25%. The full list of impacted commodities in 2020 is available on the following link.
Further details
The new duty rates are the result of joint efforts between various government authorities including Zakat, Tax and Customs Authority (ZATCA), the KSA general authority for foreign trade and relevant ministries. Notably, the new duty rates are in line with KSAs commitment with the World Trade Organization (WTO) on applicable limits for adjustment of duty rates.
Some of the categories of the products that this duty rate increase applies to include live animals, foodstuffs, chemical products, electrical equipment, and vehicle parts/equipment. The table below highlights some of the products impacted by the change in duty rates:
Product category |
Old rate |
New rate |
Live animals |
| |
Sheep and Goats (other than for breeding) |
0% |
7% |
Foodstuff |
| |
Fresh or chilled tomatoes |
0% |
15% |
Onions for food (green or dry crust) |
0% |
15% |
Eggplant |
0% |
10% |
Frozen tilapia fish |
5% |
6% |
Grape and orange juice (without added sugar or sweeteners) |
12% |
15% |
Concentrated guava and carrot juice (without added sugar or sweeteners) |
5% |
10% |
Chemical products |
| |
Magnesium oxide |
5% |
15% |
Phosphoric acid |
5% |
5.5% |
Electrical equipment |
| |
Freon air conditioners |
12%/5% |
15% |
Central air conditioners |
12%/5% |
15% |
Vehicle equipment and parts |
||
Car chassis with driver's cabin |
12% |
15% |
Radiators and parts |
12% |
15% |
Business impact
The increase in duty rates may have a financial impact on business operations. Consequently, it is important for businesses involved in the importation of affected products to re-evaluate their supply chains and ensure compliance with the new customs requirements and assess the impact on their operations.
The below highlights the key areas KSA importers should consider:
- Customs compliance: review tariff classification of imported goods to ensure appropriate declarations and correct payment of customs duties. This will also help to evaluate the cash flow impact due to potential additional duties.
- Excise tax compliance: review the retail sales price (RSP) of impacted excisable products to ensure compliance and mitigate any impact on business operations.
- Sourcing of goods: review supply chains to establish possible duty benefits due to sourcing goods either locally or from select regions where preferential duty treatment can be applied.
- Customs duty optimization: review operations to identify eligibility to enjoy certain customs incentives/exemptions aimed at minimizing customs duties impact.
