Saudi Gazette report

Riyadh — Patients using private healthcare services will have to pay more from Jan. 1, 2018, as all private healthcare services will come under the purview of Value-Added Tax (VAT).

A 5% VAT will be collected on all private healthcare services, the General Authority of Zakat and Tax (GAZT) announced on Saturday.

However, no VAT will be collected on medicines and medical equipment approved by the Ministry of Health and the Saudi Food and Drug Authority (SFDA).

No VAT will be imposed on the import of some medical equipment and machinery for people with special needs.

A 5% VAT will be collected on online purchase of goods, Al-Madina Arabic newspaper quoted the GAZT as saying.

An official source said that GAZT has approved a mechanism to collect VAT on electronic purchases.

The customs department will not clear any goods unless VAT has been paid.

There are currently 11.1 million eCommerce users in Saudi Arabia, with growth projected that will see an additional 6 million users shopping online by 2020, representing 71.9% of the total population.

The average user spends $618 online, which will reach $641 by 2020.

Male shoppers outnumber their female counterparts in every age group, accounting for 73% of overall users.

The largest concentration of shoppers is in the 25-34 year old age group, with 4 million men, and 1.5 million women shopping online.

By 2020, this age group will grow to 6 million men and 2.2 million women, with men still dominating and male market share growing to 75%.

In June 2016, GCC countries agreed to impose VAT across member states.

In Feb. 2017, Saudi Arabia ratified the GCC VAT framework and committed to introduce VAT on Jan. 1, 2018. VAT will be introduced at a standard rate of 5% across the GCC.

The General Authority of Zakat and Tax (GAZT) is responsible for managing the implementation, administration and enforcement of VAT in Saudi Arabia.

It does so in close coordination with other relevant entities.