KSA Increases customs duty rate on highly consumed products and GCC applies unified customs tariff

Recent developments affecting customs administration in the Kingdom of Saudi Arabia (KSA) include a customs duty increase for highly consumed products and the finalization of the 2017 unified customs tariff for Gulf Cooperation Council (GCC) countries. 

KSA customs duty rates on highly consumed products

The KSA Ministry of Finance has increased the customs duty rates applicable to a wide range of highly consumed products, with almost 600 Harmonized System (HS) codes affected. We understand the duty increase is effective from 2 January 2017.

The rate increase is significant, with new rates of up to 25% payable on the customs value. A full list of impacted HS codes, descriptions (in Arabic) and new duty rates can be found on the KSA Ministry of Finance website

Main products affected 

The main products affected are those highly consumed within the KSA, such as meat, dairy and other basic food items, as well as items such as fertilizers, paint, sanitary items, electrical hardware and building materials.

Many impacted items have benefited from duty subsidies since 2008. Originally a short-term measure, the application of the subsidies had been extended several times.

Next steps

Importers into the KSA should review current product lines against the relevant HS codes to quantify the impact on their supply chain.

Any rate increase will represent an upsurge in costs for importers. Supply chain contracts should be reviewed, and relevant stakeholders engaged, to determine who will assume this additional cost.

Since the new duty rates will affect current and future importations, consideration should be given to assessing alternative sourcing arrangements, making use of exemptions or relief where available. 

GCC unified customs tariff 2017

The 2017 unified customs tariff has been finalized by the customs authorities of the GCC for the region.

We understand from informal discussions with the customs authorities that the updated GCC unified customs tariff has been in force since 1 January 2017. An official announcement is yet to be made, and is expected take place in the near future.

We understand the updated tariff includes amended product descriptions and additional HS codes. Importers should review their current import product portfolio against the updated tariff and amend HS code allocations as required, including making any systems data changes. The incorrect classification of goods upon import may lead to action by the customs authorities, even where no duty rate increase results.