Saudi Triples VAT, Halts Authorities Handouts In Austerity Drive: Report

Saudi Triples VAT, Halts Government Handouts In Austerity Drive: Report

Saudi Minister Mohammed al-Jadaan had warned of “painful” steps to slash spending amid pandemic

Riyadh:

Saudi Arabia’s finance minister on Monday stated the dominion will triple its Worth Added Tax (VAT) and halt month-to-month handout funds to residents in new austerity measures amid a coronavirus-led financial droop.

“It has been determined the price of dwelling allowance can be halted from June 2020 and VAT can be raised from 5 p.c to 15 p.c from July 1,” minister Mohammed al-Jadaan stated, in accordance with the official Saudi Press Company.

The measures come after Jadaan final week warned of “painful” and “drastic” steps as the federal government steps up emergency plans to slash spending amid the double shock of the novel coronavirus and report low oil costs.

Saudi Arabia, together with different Gulf states, imposed a 5 p.c tax on items and companies in 2018 in a bid to generate extra income.

The petro-state had additionally launched handouts price billions of {dollars} to residents, referred to as the price of dwelling allowance, to cushion the impression of rising prices.

Jadaan has stated he anticipated Riyadh might lose half of its oil revenue, which contributes about 70 p.c of public revenues, as oil costs have fallen two-thirds for the reason that begin of the yr.

He stated the world’s main crude exporter would borrow near $60 billion this yr to plug an enormous funds deficit.

The Worldwide Financial Fund in April projected that the Saudi economic system would contract by 2.three p.c this yr.

(Apart from the headline, this story has not been edited by NDTV employees and is revealed from a syndicated feed.)

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