Economy

Saudi Arabia to Introduce VAT in January 2018

Saudi Arabia plans to introduce VAT in 2018, the Finance Ministry has confirmed.

It will join most of the other five Gulf Co-Operation Council (GCC) states in imposing a Value Added Tax to help cope with the collapse of global oil prices. The price of a barrel of oil has dropped from $130 to $44 (today) in two years.

The potential VAT rate will be 5%. It is expected that many essential foodstuffs will be excluded, and health and education.

VAT for the GCC states was first seriously proposed over ten years ago, but a number of attempts in the past at gaining agreement on a harmonized regime – like the EU’s – across the GCC had failed. At the same time, it has been confirmed that there will be no income tax introduced.

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