Saudi Arabia has announced it will increase its value added tax (VAT) and will also suspend the cost of living allowance in order to whether the economic storm caused by the coronavirus pandemic.
With the plummeting prices of oil, a trade which the kingdom heavily relies on, the government has been forced to seek other sources of cost-cutting measures.
Having first introduced five per cent VAT two years ago, this will now triple to 15 per cent as of July 1, 2020. Meanwhile the cost of living allowance is set to be suspended from June 1, 2020, Saudi Arabia’s state news agency SPA reports.
In a statement, the kingdom’s finance minister Mohammed Al-Jadaan called the moves taken “painful but necessary”.
“These measures are painful but necessary to maintain financial and economic stability over [the] medium to long term… and overcome the unprecedented coronavirus crisis with the least damage possible,” Al-Jadaan said.
The finance minister also said, “We are facing a crisis the world has never seen the likes of which in modern history.”
The kingdom now has 39,048 confirmed cases of coronavirus — 11,457 of which have recovered, and 246 fatalities.
Meanwhile in the UAE has 18,198 confirmed cases — 4,804 have recovered and there has been 198 deaths.
