Saudi Arabia will increase its value-added tax (VAT) from five to 15 per cent in July, the Finance Ministry said on Monday, as part of moves to support the economy amid the novel Coronavirus pandemic.
The kingdom, starting in June, would suspend its cost of living allowance, a bonus King Salman ordered two years ago for state and military employees.
Finance Minister Mohammed al-Jadaan said that the pandemic had caused a decline in revenues, thus requiring the government to cut expenditures and introduce measures to support the stability of non-oil revenues.
“The measures are painful but necessary,” al-Jadaan said in a statement.
Read Also: President Buhari Signs Finance Bill Into Law(Opens in a new browser tab)
The kingdom would also reduce allocations for some projects that are part of Vision 2030, an ambitious plan championed by Crown Prince Mohammed bin Salman to diversify the oil-reliant economy.
Saudi Arabia has reported over 39,000 confirmed cases of Covid-19, the highest in the Arab world.
It recorded 246 deaths.
The Gulf country has taken a string of measures since March to stem the spread of the virus, including a partial or total lockdown on different cities, suspending religious trips and halting international and domestic flights.
It has already announced measures worth 120 billion riyals (32 billion dollars) to support businesses affected by the virus outbreak.
It also decreased its planned 2020 spending by five per cent to reducing the impact of low oil prices. (dpa/NAN)
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