Saudi Arabia increases vat from 5 per cent to 15 per cent

T-Mag Monday 11/May/2020 10:12 AM
By: Times News Service
Saudi Arabia increases vat from 5 per cent to 15 per cent

Muscat: In order to deal with the unprecedented financial and economic ramifications of the COVID-19 global pandemic, Saudi Arabia announced that it would raise Value Added Tax (VAT) from 5 per cent to 15 per cent as of July this year.

Additionally, the cost-of-living allowance shall be discontinued as of June 2020. Minister of Finance and Acting Minister of Economy and Planning, Mohammad Aljadaan, stressed that these measures complement previously made decisions to mitigate the negative effects of the crisis from a health perspective, as well as economically and socially.

‏The Minister added that due to the precautionary measures undertaken worldwide to combat the pandemic, economic shocks had led to an unprecedented decline in oil revenue as well as non-oil revenue and economic growth.

In addition, unplanned expenses that required government intervention by increasing provisions for the healthcare sector to support the preventative and treatment capacity of health services had also burdened the system.

‏Accordingly, the Ministry of Finance and the Ministry of Economy and Planning issued a directive to undertake the most suitable and least harming measures. ‏

The impact of the approved measures is around 100 billion Saudi riyals; including cancelling, extending, or postponing some operational and capital expenditures for some government agencies, as well reducing provisions for initiative of a number of Vision Realization Programs and major projects for the fiscal year (1441-1442) -(2020).