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Islamic Finance

Saudi Arabia to increase VAT threefold in July, tightens government spending

Saudi Arabia on Monday (May 11) announced a threefold increase in value added tax to 15% as of July this year, reported state news agency SPA.

SPA cited the minister of finance and acting minister of economy and planning, Mohammad Aljadaan,  as saying the drop in public revenue and pressure on public finances due to the shocks from the COVID-19 pandemic requires a further reduction in expenditures and measures that support the stabilization of non-oil revenues.

“The impact of the approved measures is around 100 billion Saudi riyals; including cancelling, extending, or postponing some operational and capital expenditures for some government agencies, as well reducing provisions for initiative of a number of Vision Realization Programs and major projects for the fiscal year (1441-1442) -(2020),” SPA reported.

”In addition, the cost-of-living allowance shall be discontinued as of June 2020 and VAT shall increase from 5% to 15% as of July 2020.”

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