SAUDI BLOOD-SUCKING EXPLOITATION
A Brother provides the following information about Saudi exploitation of the Hujjaaj.
A few years ago the Saudi Government started imposing VAT for the first time at a rate of 5% and after only a few years the rate of VAT now stands at 15%, you may recall that South Africa started with GST of 4%, shifted to VAT, the rate kept creeping upwards over decades and now stands at 15%.
One of the principles of VAT is that it is a tax on domestic tax payers, which is the practice in most part of the world. To this end, if one exports from South Africa, then the exported goods is zero rated for VAT.
While there is little knowledge or practice of this, tourist to South Africa can claim back their VAT, however most shops are not geared up for the administration, but one will find high value products stores at the Water Front in Cape Town and other tourist sites which advertise that they can provide the required VAT certificates, with such certificates in hand together with proof of payment, one may claim back the VAT paid at the airport before departure. Japan has a very good system and I did buy products in Japan, presented my passport and was not charged VAT.
I understand that Saudi has no such refund systems for foreign pilgrims or tourist, to this end I spoke to a South African Hajj and Umrah agent who said that they have to pay 15% VAT on hotel accommodation and a 2.5% municipal tax imposed on pilgrims, this is an enormous revenue generating mechanism and transfer of wealth to the rich Saudi nation from poor pilgrims coming from amongst the poorest countries in Africa and Asia. A google search suggest that the Hajj and Umrah economy is worth $150 billion a year, assuming that this is correct then VAT income to the Saudi Authorities amounts to $22.5 billion per year and the 2.5% municipal charges on hotel cost should make Makkah and Madinah amongst the richest municipalities in the world.
Some 20 years ago I worked in Saudi, at the time SAHUC was in the process of establishing and requested the then Minister of Hajj to impose a levy to cover SAHUC operating cost on South African Pilgrims, I was informed that the Minister told SAHUC that imposing even a single Riyal of undue charges will be an oppression and he will have nothing to do with it.
Was-Salaam
18 Jamaadith Thaani 1445 – 1 January 2024