July 14, 2021
Saudi Arabia clarifies GCC origin of goods
On 2 July 2021, Saudi Arabia published Ministerial Decision No. 3852 on the local rules of origin. The Decision sets out the national rules of origin for the eligibility of preferential duty treatment when importing Gulf Cooperation Council1 (GCC) goods into Saudi Arabia. The Decision took effect on 2 July 2021.
Goods produced in any of the GCC countries are treated as national products and will receive national product duty exemptions upon import of those goods into another GCC country.
To benefit from national product exemptions:
Certain processes, such as packing, assembly and mixing of products, will not satisfy the GCC origin requirements. Manufacturing, transporting, invoicing or shipping from a GCC free zone is also unlikely to satisfy the GCC origin requirements.
Penalties may apply where goods are declared to originate from the GCC but do not meet the requirements under the Decision.
The Zakat, Tax and Customs Authority (ZATCA) of Saudi Arabia has yet to publish details on how it will conduct the process of verifying the origin of products in line with the Decision.
Businesses should review how the Decision affects their supply chain and the manufacturing, movement and invoicing of goods between GCC countries.
For additional information with respect to this Alert, please contact the following:
EY Consulting LLC, Dubai
Ernst & Young LLP (United States), Middle East Tax Desk, New York