Saudi VAT triples to 15% as part of austerity measures

Saudi VAT triples to 15% as part of austerity measures

RIADH - Saudi Arabia's decision to triple its value-added tax (VAT) from 5% to 15% came into effect Wednesday, as stores opened up again following weeks of lockdowns and restrictions due to the coronavirus pandemic and during an austerity campaign caused by record low oil prices and closures.

As the economy weathers the hardship, Saudis generally accustomed to a high standard of living are trying to adapt to the new economic reality. The decision to impose a VAT has sparked controversy since it was introduced at 5% in 2018.

For decades, Saudi citizens received financial help and benefits from the state and paid little taxes. Today, they have to comply with austerity measures, including increased VAT and the absence of a monthly allowance previously provided to employees.

"Wednesday, July 1, 2020, the decision to raise the value-added tax rate to 15% came into effect on all goods and services subject to it in commercial markets, after the announcement of Royal Order No. (A / 638) on the eleventh of last May to amend Article (II) of the value added tax regulation, which included raising the tax rate from 5% to 15%,“ state news agency SPA reported.

Finance Minister Mohammed al-Jadaan said when he announced the