Saudi Arabia is expected to lose half of its oil income this year.
PHOTO BY ARCHIVE
DUBAI – Saudi Arabia’s finance minister said on Monday (May 11) the country will triple its Value Added Tax (VAT) starting in July.
The VAT, which Saudi Arabia introduced in 2018, will be increased to 15 percent from 5 percent starting on July 1.
“It has been decided the cost of living allowance will be halted from June 2020 and VAT will be raised from 5 percent to 15 percent from July 1,” Finance Minister Mohammed Al Jadaan said in a statement released by the official Saudi Press Agency.
Al Jadaan said the decision to raise VAT was necessary amid a “sharp decline” in oil revenue as the coronavirus pandemic affected the global demand for oil.
The minister also said that the Saudi government will stop monthly handout payments or cost of living allowance to citizens.
Saudi Arabia is also “cancelling, extending or postponing” expenditures for some government agencies and cutting spending on major state projects.
A committee will study salaries and benefits to government employees and give recommendations in 30 days.
Al Jadaan said Saudi Arabia is expected to lose half of its oil income, which contributes to 70 percent of its public revenues, and will borrow nearly $60 billion this year to supplement its budget deficit. DAJ/Expat Media
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