Saudi Cabinet approves VAT, selective taxes

No more tax-free living in Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, and UAE as VAT will be implemented in GCC states in 2018.

RIYADH, Saudi Arabia – The Saudi Cabinet approved on Monday the Unified Agreement for Value Added Tax, which will be implemented throughout the Gulf Cooperation Council (GCC) starting next year.

In a session chaired by King Salman at the Al-Yamamah Palace in Riyadh, the Cabinet gave its nod to the measure after deeming that the Kingdom is ready to implement it, the Saudi Press Agency (SPA) said.

The six-nation GCC is composed of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).

A five-percent levy will apply to certain goods following a GCC agreement last June.

The move is in line with an International Monetary Fund (IMF) recommendation for Gulf states to impose revenue-raising measures including excise and value added taxes to help their adjustment to lower crude oil prices, which have slowed regional growth.

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The GCC countries have already agreed to implement selective taxes on tobacco, and soft and energy drinks this year.
Regional residents had long enjoyed a tax-free and heavily subsidized existence.

Saudi Arabia, the world’s biggest oil exporter, froze major building projects, cut cabinet ministers’ salaries and imposed a wage freeze on civil servants to cope with last year’s record deficit of $97 billion.

It also made unprecedented cuts to fuel and utilities subsidies.

The Kingdom is boosting non-oil revenue as part of economic diversification efforts and aims to balance its budget by 2020. [via ArabNews]

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