Saudi Arabia: Rules of origin for imported goods

Rules for determining the origin of goods imported into Saudi Arabia

Rules for determining the origin of goods imported into Saudi Arabia

Ministerial Decision No. 3852, dated 2 July 2021 (22/11/1442 H), sets forth the rules for determining the origin of goods imported into Saudi Arabia.  

The rules of origin have an effective date of 2 July 2021, and will remain in effective until common rules of origin are adopted and implemented by the Gulf Cooperation Council (GCC) countries.

The Saudi rules of origin reiterate the GCC-origin conditions under the Unified Economic Agreement, namely:

  • A 40% local added value
  • An above 50% GCC shareholding

In addition, the Saudi rules of origin now require a minimum 25% nationalization threshold with respect to the entity manufacturing the GCC-origin goods. Meeting or exceeding this threshold will have an impact on the requirement of a minimum 40% local added value conferring the GCC origin on goods.   

The Saudi rules of origin treat the goods manufactured by free zone businesses as foreign goods (of non-GCC origin), even when these goods include components and raw materials of GCC origin or goods that have been admitted into free circulation in the GCC, prior to being used in manufacturing processes in the free zone. Thus, the rules of origin appear to exclude any duty-exemption benefit to free zone businesses. This exclusion is confirmed by the definition of the “direct confinement” which is one of the conditions for GCC-origin goods to benefit from a duty exemption.     

The rules of origin provide further information about the definition of “direct consignment,” expanding from this definition:

  • Any transport taking place within a non-GCC country
  • Transit that does not take place due to geographic imperatives
  • Any transit through free zones (including any invoices or shipping documents accompanying the goods)


For more information, contact KPMG’s Trade & Customs global practice leader:

Doug Zuvich | +1 312 665 1022 | dzuvich@kpmg.com 

 

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