Saudi Arabia has decided to increase the value added tax (VAT) from 5% to 15% starting 1 July and to suspend the payment of the cost of living allowance from 1 June, according to the Saudi Press Agency.
Saudi Arabia will cancel and postpone spending and cut some allocations for Vision 2030, with a total cost of 100 billion riyals, according to Al Arabiya.
This was part of the government’s efforts to manage the economic and fiscal impact of the coronavirus pandemic and the oil price crash, Saudi Finance Minister Mohammed Al Jadaan said on Monday.
“These measures are painful but necessary to maintain financial and economic stability over the medium to long term…and to overcome the unprecedented coronavirus crisis with the least damage possible,” Finance Minister Mohammed al-Jadaan said in the statement.
In the first three months of the year, oil revenues of the kingdom decreased by 24 percent from the previous year to $34 billion, reducing overall revenues by 22 percent.