by BERNAMA / pic by BERNAMA
Saudi Arabia will increase its value added tax (VAT) from 5% to 15% as of July 2020 as part of its measures to confront the financial and economic impact of the COVID-19, reported Saudi Press Agency (SPA).
In addition, the cost-of-living allowance shall also be discontinued as of June 2020.
Other measures include cancelling, extending, or postponing some operational and capital expenditures for some government agencies, as well as reducing provisions for initiative of a number of Vision Realization Programs and major projects for the fiscal year 2020.
The impact of the approved measures is around 100 billion Saudi riyals (US$26.61 billion).
Minister of Finance and Acting Minister of Economy and Planning, Mohammad Aljadaan, highlighted the importance of the measures undertaken to protect the Saudi economy and overcome the unprecedented financial and economic ramifications of the global coronavirus pandemic in the best way possible.
He stressed that these measures complement previously made decisions to mitigate the negative effects of the crisis from a health perspective, as well as economically and socially.
The Minister emphasised that the crisis caused by the global pandemic resulted in three economic shocks – the unprecedented decline in oil demand, the necessary precautionary measures undertaken to prevent the spread of the pandemic that led to the reduction of many local economic activities, as well as the unplanned expenses by the government for the healthcare sector.
To improve spending efficiency, a ministerial committee has been established to study the financial benefits paid to all employees, contractors and those of similar status whom are not subject to Civil Service Law in government ministries, institutions, authorities, centres, and programmes.
Accordingly, the Ministry of Finance and the Ministry of Economy and Planning have presented these financial and economic developments and the proposed measures to tackle them; and a directive has been issued to undertake the most suitable and least harming measures.