Saudi Arabia to Raise VAT, Suspend Cost of Living Allowance
2020-05-11 - 11:53 am
Bahrain Mirror: The Saudi Minister of Finance and Acting Minister of Economy and Planning, Mohammad Al-Jadaan, announced on Monday (May 11, 2020) that the Kingdom has taken a number of measures to mitigate the negative effects of the Coronavirus pandemic, including suspending the cost of living allowance and raising the value added tax.
Al-Jadaan highlighted the importance of the measures that aim at protecting the Saudi economy and overcoming the unprecedented financial and economic ramifications of the global coronavirus pandemic in the best way possible.
He stressed that these measures are complementary to the previously made decisions to mitigate the negative effects of the crisis on the health, economic and social aspects.
The Minister stated that the challenges imposed by the crisis have led to a decline in public revenues and exerted pressure on public finances in a way that could not be dealt with later without causing harm to the overall economy of the Kingdom in the midsummer and long-term.
"Further reduction in expenditures is needed, as well as undertaking measures that support the stabilization of non-oil revenues," he noted.
Al-Jadaan went on to say that the impact of the approved measures is around 100 billion Saudi riyals; including cancelling, extending, or postponing some operational and capital expenditures for some government agencies, as well reducing provisions for initiative of a number of Vision Realization Programs and major projects for the fiscal year 2020.
"Cost of living allowance will be suspended as of June first, and the value added tax will be increased to 15% from 5% as of July first," he further stated.
The minister concluded by saying that "These measures that have been undertaken today, as tough as they are, are necessary and beneficial to maintain comprehensive financial and economic stability on the medium and long-term for the interest of the country and its citizens."