Saudi Arabia considers VAT
Saudi Arabia is considering the introduction of a Value Added Tax regime as it looks to adjust its budget deficit to the fallen price of oil.
The country is the world’s largest exporter of oil, and has been heavily hit by the halving of the crude oil price to below $50 per barrel in the past twelve months. This means it will need to look for other sources of revenues, diversifying its reliance of fuel duties. The Kingdom is also looking at reducing subsidies to the middle classes on energy and water supplies. The latest views on VAT were given by Mohammed bin Salman, who leads the review of the country’s economy.
As part of the Gulf Cooperation Council, Saudi Arabia has been discussing the introducing of a harmonized VAT regime wit the five other member states. The proposed consumption tax will be around 5%.