How Saudi Arabia ties with UAE, Kuwait, Bahrain, Qatar and Oman in 2025 Blast Tourism Businesses with New Tax Policies in Refusing to Join or Rejecting Growth Opportunities?

In 2025, the Gulf Cooperation Council (GCC) countries, which include Saudi Arabia, the United Arab Emirates (UAE), Kuwait, Bahrain, Qatar, and Oman, have introduced several important tax-related measures. While no new tourist-specific taxes have been introduced, several tax policies impacting the tourism industry have either been implemented or updated, which are likely to influence the cost of travel and the overall business landscape in the region. These tax-related developments include the introduction of VAT refund schemes for international visitors, adjustments to corporate taxes, changes to excise taxes, and the implementation of the Domestic Minimum Top-Up Tax (DMTT) in certain countries. This article delves into these developments in the context of the broader tourism industry and explores the potential implications for travelers visiting the GCC countries in 2025.

Saudi Arabia: Introduction of VAT Refund Scheme for International Tourists

Saudi Arabia, a significant player in the GCC tourism sector, introduced a major development in 2025 with the launch of a Value Added Tax (VAT) refund scheme for international tourists. The move is part of the country’s broader strategy to boost its tourism sector, which is an integral component of its Vision 2030. This VAT refund program, effective from April 18, 2025, allows international tourists visiting Saudi Arabia to claim refunds on the 15% VAT paid on eligible goods and services purchased during their stay in the kingdom. The tax refund initiative has been designed to enhance Saudi Arabia’s appeal to tourists, particularly those from non-GCC countries.

Under this system, tourists can claim VAT refunds on purchases made at VAT-registered retailers, provided the goods are for personal use and exported out of Saudi Arabia within a specified timeframe. Items purchased by tourists, such as luxury goods, clothing, electronics, and souvenirs, are eligible for VAT refunds, provided they meet the criteria. However, certain categories of goods, including motor vehicles, tobacco products, and food, are excluded from this refund system.

The introduction of the VAT refund scheme is expected to have a positive impact on the tourism industry in Saudi Arabia. The incentive aims to attract more foreign tourists by reducing the overall cost of goods purchased in the country. This initiative could also encourage higher spending by international tourists, particularly in the luxury goods sector. Additionally, it could have a ripple effect on the broader travel sector, encouraging more visitors to consider Saudi Arabia as a shopping destination. The implementation of VAT refunds at key departure points, such as airports, will ensure the process is convenient for tourists, thus enhancing the overall experience of visiting Saudi Arabia.

United Arab Emirates: Continued VAT Refund Scheme for Tourists

The UAE, one of the most popular travel destinations in the GCC region, continues to offer its VAT refund scheme for foreign tourists. Introduced in 2018, the UAE’s VAT refund program has become an integral part of the country’s strategy to attract international visitors. The refund allows tourists to reclaim the 5% VAT paid on purchases made at VAT-registered retailers within the country. In 2025, this initiative remains an attractive incentive for visitors to the UAE.

To qualify for a VAT refund, tourists must meet specific criteria, including being non-residents, at least 18 years old, and having made purchases from VAT-registered stores. The minimum purchase amount required to claim the VAT refund is AED 250 (approximately USD 68). Goods eligible for the refund include electronics, clothing, souvenirs, and other items purchased for personal use. However, there are exclusions such as services and motor vehicles, which are not eligible for VAT refunds.

The UAE VAT refund system is designed to provide a seamless and efficient process for travelers. Refunds can be processed at designated refund points located at major international airports, and tourists can receive their refunds either in cash or through a credit card. This system has contributed to the UAE’s standing as one of the top shopping destinations for international tourists.

While the VAT refund scheme is not a new tax, its ongoing implementation continues to have a significant impact on the UAE’s tourism industry. With the country’s increasing focus on attracting more visitors and positioning itself as a global tourism hub, the VAT refund initiative plays a key role in encouraging spending and boosting the overall visitor experience.

Kuwait: Introduction of Domestic Minimum Top-Up Tax (DMTT) and Corporate Tax Changes

In 2025, Kuwait introduced the Domestic Minimum Top-Up Tax (DMTT), which applies to multinational enterprises operating in the country. The DMTT is part of Kuwait’s compliance with international tax standards set by the Organisation for Economic Co-operation and Development (OECD) to curb tax avoidance and increase corporate tax fairness. The tax is levied on the profits of Kuwaiti entities within multinational corporations that do not meet the minimum tax threshold as set by the OECD guidelines.

While the DMTT does not directly affect tourists, it could have indirect consequences for the tourism sector. The tax could impact international hotel chains, travel operators, and other multinational tourism businesses operating in Kuwait. These companies may experience higher operational costs, which could lead to increased prices for consumers, including tourists. As a result, tourists visiting Kuwait may notice slight price hikes in services provided by multinational businesses, particularly in the hospitality and travel sectors.

Additionally, Kuwait has also introduced changes to corporate taxation, with businesses that exceed a specific revenue threshold now required to pay corporate taxes. While this primarily affects local businesses, the changes in corporate tax laws may have a cascading effect on the tourism industry, as businesses within the sector adjust to the new tax framework. The introduction of such taxes underscores the increasing complexity of Kuwait’s fiscal landscape and could lead to a rethinking of pricing strategies within the tourism industry.

Bahrain: Corporate Tax and Excise Tax Adjustments

Bahrain, known for its business-friendly environment and burgeoning tourism sector, has also made notable adjustments to its tax policies in 2025. The country has introduced a new corporate tax for companies with higher revenue levels, which is aimed at diversifying Bahrain’s economy away from oil dependence. This corporate tax, effective from the fiscal year starting January 1, 2025, will primarily affect businesses with substantial operations in Bahrain, including those in the tourism and hospitality industries.

In addition to the corporate tax, Bahrain has also increased excise taxes on specific goods, including sugary drinks, energy drinks, and tobacco products. These increases are part of Bahrain’s efforts to raise revenue and promote healthier lifestyle choices. Although these tax adjustments primarily target consumers of specific goods, they could have an indirect effect on tourists, as the prices of certain products and services may increase due to these excise tax hikes. The increased tax on energy drinks and sugary beverages could impact the prices of popular items sold in hotels, restaurants, and tourist attractions, potentially affecting the overall cost of a tourist’s stay.

Moreover, as Bahrain continues to develop its tourism sector and seek new sources of revenue, these changes in tax policy could influence the cost of travel for both residents and visitors. As such, tourists visiting Bahrain in 2025 should be aware of the potential price increases for certain goods and services, particularly those that are subject to excise tax.

Qatar: Corporate Tax Developments and Their Impact on Tourism

Qatar, another key player in the GCC tourism market, has implemented several tax-related changes in 2025. One of the most notable developments is the introduction of corporate taxes for companies exceeding a certain revenue threshold, effective from the fiscal year beginning January 1, 2025. This move is part of Qatar’s broader strategy to diversify its economy, reduce reliance on oil revenues, and meet international tax standards. The tax applies to all business entities operating in Qatar, including those in the hospitality and travel sectors.

While this new corporate tax is unlikely to directly affect tourists, it may have an indirect impact on the tourism industry. Multinational hotel chains, airlines, and travel agencies operating in Qatar could face higher operating costs due to the new tax structure, and these costs may be passed on to consumers. This could lead to higher hotel rates, flight prices, and travel-related services for tourists visiting Qatar in 2025.

Additionally, Qatar has ratified the Domestic Minimum Top-Up Tax and introduced income inclusion rules, which further align the country’s tax policy with international tax standards. These measures are primarily aimed at multinational enterprises but could influence the pricing of services in the tourism sector, particularly for high-end and luxury travel experiences.

Oman: Corporate Tax Changes and International Tax Agreements

Oman, which has made steady progress in diversifying its economy, has also made adjustments to its corporate tax framework in 2025. Businesses in Oman, including those in the tourism sector, must comply with the country’s corporate tax regulations, which include the requirement for audited financial statements for all corporate taxpayers. The country has also ratified several Double Tax Avoidance Treaties (DTAs) with countries such as Cyprus and Tanzania, aimed at reducing the burden of double taxation on businesses operating in Oman.

For tourists, these changes in corporate tax laws may not have a direct impact, but they could influence the pricing strategies of businesses in the tourism sector. Companies in the hospitality, travel, and tourism industries that are subject to these tax regulations may adjust their pricing to accommodate the additional tax burdens. As Oman continues to refine its tax policy, it is possible that new taxes or regulations may be introduced in the future that could have a more direct impact on the travel experience for visitors to the country.

Conclusion: The Evolving Tax Landscape in GCC Tourism

In conclusion, while the GCC countries have not introduced new tourist-specific taxes in 2025, several key tax-related developments are shaping the tourism landscape in the region. From VAT refund schemes in Saudi Arabia and the UAE to corporate tax changes in Kuwait, Bahrain, Qatar, and Oman, these measures are likely to have a ripple effect on the cost of travel for international visitors.

For tourists, the introduction of VAT refund schemes in Saudi Arabia and the UAE is a welcome development, providing financial relief and encouraging spending during their travels. However, changes in corporate taxes and excise taxes in countries like Kuwait and Bahrain could lead to higher prices for certain goods and services, impacting the overall cost of a tourist’s stay. As the GCC continues to refine its fiscal policies and adapt to global economic trends, travelers visiting the region in 2025 and beyond should remain informed about these changes to better manage their travel budgets and expectations.

The evolving tax landscape in the GCC reflects a broader trend toward economic diversification and international tax compliance, with potential long-term implications for the tourism sector. By staying informed about these developments, tourists can better navigate the changing landscape and continue to enjoy the rich cultural, historical, and leisure experiences that the GCC countries offer.

Reference Section:

Arabian Business
DLA Piper
Reina Consulting
GlobalNewswire
ResearchGate

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