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RIAD: Saudi Arabia’s finance minister said on Monday (May 11) that the kingdom will triple its Value Added Tax (VAT) and suspend monthly payments to citizens in new austerity measures amid an economic depression led by the coronavirus.
“It was decided that the cost of living subsidy will be suspended from June 2020 and the VAT will rise from 5 percent to 15 percent from July 1,” said Minister Mohammed al-Jadaan, according to the official agency. from the Saudi press.
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The measures came after Jadaan last week warned of “painful” and “drastic” steps as the government steps up emergency plans to cut spending amid the double shock of the new coronavirus and record low oil prices. .
Saudi Arabia, along with other Gulf states, imposed a 5 percent tax on goods and services in 2018 in a bid to generate additional revenue.
The oil state had also released billions of dollars worth of brochures to citizens, known as a cost-of-living allowance, to cushion the impact of rising costs.
Jadaan said he hoped Riyadh could lose half of its oil revenue, contributing about 70 percent of government revenue, as oil prices have fallen two-thirds since the beginning of the year.
He said the world’s top crude oil exporter would borrow about $ 60 billion this year to cover a huge budget deficit.
The International Monetary Fund in April projected that the Saudi economy would contract 2.3 percent this year.
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