31 May, 2020
The Government of the Kingdom of Saudi Arabia (‘KSA’) has announced an increase in the customs duty rates for an extensive range of goods, including foodstuff, mineral and chemical products, plastic, rubber, leather goods, textile and footwear, base metals (e.g. steel, iron, nickel, copper, aluminium), cement, ceramic, machinery, equipment and electrical equipment, toys, furniture, vehicles and various other manufactured goods. The measure affects a total of 57 Chapters and more than 2,000 Tariff Lines of the KSA Integrated Customs Tariff. The announced increase in customs duty rates would be applicable from June 10, 2020 onwards.
Proposed changes to the KSA Integrated Customs Tariff
The Government of KSA has decided to increase the customs duty rates for an extensive range of goods. A total of 57 Chapters and more than 2,000 Tariff Lines of the KSA Integrated Customs Tariff are expected to be affected. The full list of products affected was recently published on the Saudi Customs website and can be accessed through this link (only the Arabic version is currently available): HS codes subject to increased duty rates
For ease of reference, we have listed the main categories of goods that will be subject to higher customs duties, starting June 10, 2020, below:
What can I do to minimise the impact on my business?
The changing trade landscape has become a constant source of uncertainty for companies. More importantly, tariffs impact all aspects of an organization and have a direct impact on profitability. In managing these uncertain times, businesses are expected to understand the tariffs impact on profitability today and the impact that tariffs may have on profitability in the future.
As the customs duty rates have been increased to levels reaching 10%, 15% and 20% in many of the above listed cases, it is critical for businesses importing goods in KSA to consider the possibility of reviewing their customs and international trade policies to ensure efficient duty management.
Some of the options that importers can consider, in accordance with the applicable customs rules and regulations in KSA, may include:
It is also important to consider the use of digital automated trade solutions (many of which may exist in native ERP environments or can be added with additional software packages).These solutions can automate and standardize import and export processes across business units, manage customs data in a central location as well as enabling local, regional and global reporting dashboards. This helps reduce risk and provides an extra layer of control surrounding interactions with government agencies. These type of solutions also help organizations manage trade uncertainties by providing real time visibility to customs data that can be used to accurately set prices and provide support in managing profitability and ensuring compliance.
Next steps to consider
The announced increase in customs duty rates as of June 10, 2020 requires that importers in KSA start to consider the necessary changes required to manage the impact on their operations, and comply with the legal requirements in terms of declaring and paying the right amount of customs duty to Saudi Customs. It is also recommended that importers consider the appropriateness of reviewing their customs and international trade policies to address the impact of the new customs duty rates in KSA in an efficient manner.
Middle East Tax & Legal Services Leader, PwC Middle East
Tel: +966 56 704 9675
Partner - Managed Services & Compliance Lead, PwC Middle East
Tel: +966 (5) 62 713073
Partner, Middle East Customs & International Trade, PwC Middle East
Tel: +971 (0) 4 304 3936
Chadi Abou Chakra
Middle East Indirect Tax Network Leader, PwC Middle East
Tel: +966 11 211 0400 Ext: 1858
Partner, International Tax and M&A Services, PwC Saudi Arabia
Tel: +966 11 211 0400 ext. 1771
Partner | TLS Tax Strategy & Transformation Leader, PwC Middle East
Tel: +971 56 385 4717