Saudi Arabia approves rules and sets out regulations for duty free expansion

By Luke Barras-hill |

In recent years, Lagardère Travel Retail has entrenched its position in Saudi Arabia at airports in Riyadh, Jeddah, Dammam (pictured) and Madinah.

The Kingdom of Saudi Arabia (KSA) has formalised rules concerning the expansion of duty free shopping at ports of entry.

Conditions, controls and procedures related to the acquisition of operating licences and other requirements were published in the state’s official gazette Umm Al-Qura on Friday.

As reported, the KSA gave the green light to duty free zones at airport arrival zones, seaports and land border crossings in September.

In a ministerial resolution seen by TRBusiness, the new rules – revealed by English language title Saudi Gazette – permits (subject to restrictions) imports to and exports from duty free markets of any foreign goods exempt of customs duties.

The rules set out the particulars for storing goods in customs warehouses and necessary shop controls, including sales and inventory management, information storage and reporting protocols to Zakat, Tax and Customs Authority.

An application to obtain a licence is to be made through the authority’s official channels and should contain the relevant documentation.

More detail to come on arrivals and borders…

The rules become effective 30 days from their publication in the Kingdom’s official gazette following a decision by the Minister of Finance H.E. Mohammed bin Abdullah Al-Jadaan.

“Free market locations and their establishment free markets may be established at the air, sea and land ports, and sales are permitted in them for travellers arriving and departing from the Kingdom,” noted the resolution.

An industry source in Saudi Arabia told TRBusiness: “The confirmation of the regulations completes the circle. However, the implementing regulations for arrivals and borders have not yet been released so the operation of arrivals duty free shops cannot yet be applied.

“It is expected that these regulations will be released during Q1 and that will then give clarity for how the operations will have to be managed, and what can be sold and any tax implications (eg VAT) that may apply.”

The developments will be welcome news to the KSA’s high-growth duty free and travel retail sector.

Lagardère Travel Retail possesses a notable grip at several airports, including King Khalid International Airport, King Abdulaziz International Airport, Prince Mohammad bin Abdulaziz International Airport and King Fahd International Airport.

“There is no doubt that the KSA duty free market is one that will grow dramatically in the coming years and as a consequence, attract significant international interest,” added the source. “The addition of arrivals and borders will increase the size of the pie and make the economics more compelling. This in turn will draw more operators seeking to benefit and create a more dynamic environment which can only be a good thing.”

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