How Are Customs Duties on Goods Calculated in Saudi Arabia?

If you are wondering how customs duties on goods are calculated when importing into Saudi Arabia, the calculation does not depend on the product’s purchase price alone, and there is no single customs duty rate that applies to all goods.

In simple terms, the calculation involves four stages:

1. Determining the customs value of the goods.
2. Determining the customs duty rate according to the goods’ tariff classification.
3. Calculating customs service fees and any other applicable charges.
4. Calculating import value-added tax based on its prescribed taxable value.

The Zakat, Tax and Customs Authority provides an official service for searching the customs tariff by product description or Harmonized System HS Code, because duty rates vary from one item to another.

What Is the Customs Value of Goods?

The customs value is the value that customs authorities use as the basis for calculating customs duties on imported goods.

The primary valuation method relies on the transaction value, meaning the price paid or payable for the goods when sold for export, with the additions or exclusions required by customs valuation rules. The Authority’s guidance indicates that the value shown in the customs declaration is usually the CIF value, which includes the value of the goods along with shipping and insurance costs up to the place of importation.

Therefore, in many cases, the value can be simplified as follows:

Approximate customs value = Value of goods + Shipping + Insurance

Note that the final valuation is subject to customs valuation rules and the documents submitted.

Example

Value of goods = 50,000 SAR

Shipping cost = 4,000 SAR

Insurance = 1,000 SAR

The value used in the example is therefore:

50,000 + 4,000 + 1,000 = 55,000 SAR

This value will be the starting point for calculating customs duties.

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How Do I Find the Customs Duty Rate for the Goods?

An answer such as the following is not correct:

“Customs duties in Saudi Arabia = Always 5%”

This is because the duty rate depends on the goods’ classification in the customs tariff.

This is determined using:

• The product’s name.
• Its description.
• Its material or composition.
• Its use.
• The Harmonized System HS Code.
• The country of origin in cases where it has a regulatory effect on the applicable treatment.

The Zakat, Tax and Customs Authority allows users to check duties by searching by keyword, tariff heading, Harmonized System code, or customs chapter.

Therefore, the correct tariff classification must be identified before attempting to calculate the final import cost.

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How to Calculate Customs Duties

Once the customs value and tariff rate are known:

Customs duties = Customs value × Customs duty rate

Illustrative Example

We will assume for illustration purposes only that the goods are subject to a customs duty rate of 5%.

Customs value:

55,000 SAR

Assumed duty rate:

5%

Calculation:

55,000 × 5% = 2,750 SAR

Customs duties in this example therefore = 2,750 SAR.

The 5% rate here is merely a numerical example, not a general rate for all imports. The goods’ actual tariff classification must be checked.

Are There Customs Service Fees on Imports?

Yes. The Zakat, Tax and Customs Authority applies a fee mechanism for processing import customs declarations.

Under the mechanism applied since October 6, 2024, the fee is:

0.15% of the value of the imported goods, including insurance and shipping

Subject to:

• A minimum of 15 SAR
• A maximum of 500 SAR

Special provisions apply to certain shipments, including a different limit for goods exempt from value-added tax.

Example

Value = 55,000 SAR

Service fee:

55,000 × 0.15% = 82.50 SAR

The declaration processing service fee in this example therefore = 82.50 SAR.

Read also: The Penalty Exemption Initiative

How Is Value-Added Tax Calculated on Imported Goods?

A common mistake is calculating value-added tax only on the original price of the goods.

For imports, the Zakat, Tax and Customs Authority’s guidance explains that the value of imported goods for VAT purposes includes the customs value, plus customs duties, excise tax – if applicable – and any other charges included in the taxable base, excluding VAT itself.

In simplified terms, where there is no excise tax or other special charges:

VAT taxable base = Customs value + Customs duties + Other charges included in the taxable base

Then:

Value-added tax = Taxable base × 15%

For a broader understanding of how VAT is calculated, you can review the guide to calculating value-added tax in Saudi Arabia.

A Complete Example of Calculating Customs Duties on Goods

Consider the following example:

First:

Customs value = 50,000 + 4,000 + 1,000 = 55,000 SAR

Second, customs duties in the example:

55,000 × 5% = 2,750 SAR

Third, the service fee:

55,000 × 0.15% = 82.50 SAR

To illustrate the VAT calculation in simplified terms, if these amounts are the items included in the taxable base and there is no excise tax or other additional charges:

55,000 + 2,750 + 82.50 = 57,832.50 SAR

Value-added tax:

57,832.50 × 15% = Approximately 8,674.88 SAR

The government charges shown in this approximate example are therefore:

This example is for illustration only. The actual result may vary depending on the tariff classification, applicable charges, type of goods, and any other taxes or treatments.

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The Formula for Calculating the Cost of Imported Goods

From a business perspective, customs duties should not be considered in isolation; instead, consider the full cost of the goods upon arrival.

The cost can be viewed as follows:

Import cost = Value of goods + Shipping and insurance + Customs duties + Fees and services + Other import-related costs

The accounting treatment of value-added tax varies according to the business’s tax status and whether the tax is deductible. Therefore, VAT should not automatically be considered a final component of inventory cost in all cases without referring to the correct accounting and tax treatment.

This makes purchasing cost management particularly important for importing companies. You can review the guide to sales and purchases accounting to understand how purchases relate to costs and accounts.

What Is the Difference Between Customs Duties and Value-Added Tax?

It is important not to confuse the two.

Goods may be subject to a specific customs duty, after which value-added tax is also calculated according to the rules applicable to imports.

How Do Customs Duties Affect Inventory Cost?

For companies that import products for resale, incorrectly calculating costs can lead to inaccurate pricing.

For example, if only the product’s purchase price is recorded without properly accounting for import costs, this may result in:

• An unrealistic profit margin.
• Inaccurate inventory costs.
• Pricing below the required level.
• Discrepancies in profit reports.
• Difficulty comparing suppliers.

Purchases must therefore be linked to inventory and costs, rather than recording each component separately.

You can review the guide to warehouse management and inventory organization to understand how receiving, costs, and item movements affect inventory balances.

How Do Accounting Systems Help Importing Companies?

As purchasing and importing transactions become more frequent, relying on separate files to calculate goods values, expenses, and inventory becomes more prone to errors.

An accounting system helps organize:

• Suppliers.
• Purchase invoices.
• Goods costs.
• Expenses.
• Warehouses.
• Item balances.
• Sales.
• Supplier accounts.
• Financial reports.

Here, you can use an integrated accounting system from Aamal Soft to connect purchases with suppliers, warehouses, item movements, accounts, and reports, instead of treating the cost of imported goods as a figure separate from the rest of the accounting cycle.

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Is There an Official Customs Calculator in Saudi Arabia?

Yes. The Zakat, Tax and Customs Authority provides a customs duties and taxes calculator that allows users to select the type and category of goods and enter their value to obtain an estimate of duties and taxes.

However, the Authority explains that the calculator’s result is an estimate and is not legally binding, and that the actual amount is determined precisely when the customs declaration is submitted.

What Changes the Customs Duties on a Shipment?

The result may vary depending on:

• The type of goods.
• The tariff classification.
• The customs value.
• Shipping and insurance costs.
• The country of origin and applicable treatment.
• The availability of an exemption or special treatment.
• Excise tax on certain goods.
• Other fees and services.
• The accuracy of the classification and documents.

Therefore, calculating customs duties before identifying the correct HS Code remains only an estimate.

Common Mistakes When Calculating Customs Duties

Avoid the following mistakes:

• Assuming that all goods have the same customs duty rate.
• Calculating duties only on the purchase price without examining the customs value.
• Ignoring shipping and insurance.
• Using an incorrect HS Code.
• Confusing customs duties with value-added tax.
• Calculating VAT only on the product’s price.
• Ignoring other fees and services.
• Failing to record import costs correctly in inventory accounts.
• Treating an approximate calculator as a final declaration.

Frequently Asked Questions

How Are Customs Duties on Goods Calculated?

The customs value is determined first, then multiplied by the duty rate specified for the goods’ tariff classification. Other charges are then added, and value-added tax is calculated according to its statutory basis.

Are Customs Duties in Saudi Arabia 5%?

There is no single rate for all goods. Duties vary according to the goods’ classification, HS Code, and applicable customs tariff.

Is Shipping Included in Customs Duty Calculations?

Shipping and insurance are included in the CIF value used to determine the customs value in cases where this method applies.

Is the 15% Tax Calculated After Customs Duties?

For imports, customs duties and other charges specified by law are included in the import value for VAT purposes, so VAT is not calculated on the goods’ price alone.

How Do I Find the Customs Tariff for My Product?

You can search the official customs tariff service using the goods’ description, tariff heading number, or Harmonized System HS Code.

How Do I Determine the Final Shipment Cost Before Importing?

Add together the prices of the products, shipping, insurance, customs duties, services, and other costs, while separating value-added tax and treating it according to your business’s tax status.

In Conclusion:

To answer the question of how customs duties on goods are calculated in Saudi Arabia, remember that the process does not begin with a fixed rate, but with classifying the goods and determining their customs value.

In simplified terms:

Customs value ≈ Value of goods + Shipping + Insurance

Then:

Customs duties = Customs value × The goods’ applicable tariff rate

Applicable charges are then added, and value-added tax is calculated according to the legally prescribed import basis.

Therefore, the most important step before calculating the cost of any shipment is to confirm the correct tariff classification, then use the Zakat, Tax and Customs Authority’s calculator to obtain an initial estimate, while treating the customs declaration as the reference for the actual amount.

Within the company, it is important for this cost to flow systematically into purchases, inventory, and reports. Accounting and sales software helps connect suppliers, purchases, warehouses, and product movements with accounts, while the guide to warehouse management provides a broader explanation of the inventory cycle, from receiving through stocktaking and reporting.