The Kingdom of Saudi Arabia on Monday announced it will triple its Value Added Tax (VAT) and halt monthly handout payments to citizens in new austerity measures amid a coronavirus-led economic slump.
According to the finance minister, Mohammed al-Jadaan, the petro-state had also introduced handouts worth billions of dollars to citizens, known as the cost of living allowance, to cushion the impact of rising costs.
“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.
“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,” he said in the statement.
Saudi Arabia, along with other Gulf states, imposed a five percent tax on goods and services in 2018 in a bid to generate additional revenue.
The petro-state had also introduced handouts worth billions of dollars to citizens, known as the cost of living allowance, to cushion the impact of rising costs.
The minister has said he expected Riyadh could lose half of its oil income, which contributes about 70 percent of public revenues, as oil prices have fallen two-thirds since the start of the year.
He said the world’s leading crude exporter would borrow close to $60 billion this year to plug a huge budget deficit.
