Politics

Saudi Arabia to triple its VAT

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Saudi Arabia will triple its value-added tax rate and suspend a cost of living allowance for state employees, the kingdom’s finance minister said on Monday, seeking to shore up finances struck by low oil prices and a coronavirus-driven slowdown. Report informs citing the Reuters.

“The cost of living allowance will be suspended as of June 1, and the value-added tax will be increased to 15% from 5% as of July 1,” Finance Minister Mohammed al-Jadaan said in the statement reported by the state news agency.

“These measures are painful but necessary to maintain financial and economic stability over the medium to long term…and to overcome the unprecedented coronavirus crisis with the least damage possible.”

In 2018, Saudi Arabia’s King Salman ordered a monthly payment of 1,000 riyals ($267) to every state employee to compensate them for the rising cost of living after the government hiked domestic gas prices and introduced value-added tax.

About 1.5 million Saudis are employed in the government sector, according to official figures released in December.

The world’s largest oil exporter is suffering from slumping prices, while at the same time, measures to fight the new coronavirus are likely to curb the pace and scale of economic reforms launched by Crown Prince Mohammed bin Salman.

According to the latest data, in Saudi Arabia, more than 37 thousand people were infected with the coronavirus, 239 died.

Report

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