Saudi Arabia has decided to triple its VAT, from 5 percent to 15 percent. The measure is being taken to support the coronavirus-hit economy and it will be effective from July 1st.
Apart from this, the cost of living allowance will also be suspended, from 1 June. “These measures are painful but necessary to maintain financial and economic stability over [the] medium to long term and overcome the unprecedented coronavirus crisis with the least damage possible,” Finance Minister Mohammed al-Jadaan said in the statement.
The pandemic and record low oil prices have forced the government to come up with emergency plans to reduce spending and save the economy.
Saudi Arabia had imposed VAT on goods and services in 2018 along with other Gulf countries, as a part of its economic diversification strategy. The VAT rate in the UAE remains the same, despite the current crisis.
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