Published On: Wed, Jan 3rd, 2018

VAT Introduced by Saudi Arabia and UAE to Raise Revenue

Facebooktwittergoogle_plusredditpinterestlinkedinmail

VAT Introduced by Saudi Arabia and UAE

A recent imposition of taxes to raise revenue and meet the burgeoning deficit has unveiled the shift in fiscal policy of Gulf state. VAT Introduced by Saudi Arabia and UAE  in a bid to even out inflows and outflow. The gulf had the reputation of zero tax and always upheld the welfare of its citizens.

The Saudi government has also revised the prices of petrol and it was enforced overnight on occasion of New Year.

The decline in the prices of services and commodities worldwide has urged these two Gulf States to introduce measures to curb the deteriorating financial position.

Despite, the center of attraction for international shopping enthusiasts and Maniacs, 5% sales tax has been applied to a wide variety of goods and services. It has been estimated that around two percent of GDP could be realized from this tax imposition.

The other Gulf States are also eyeing to impose similar taxes to raise revenue. But they have postponed theirs move until 2019. The price hike of petrol in Saudi was second in a row. still, it is ranked among the countries with the lowest petrol prices. Supreme grade petrol after revised prices costs 54 cents a liter from previously 24 cents. And low grade cost 36.5 cents from 20 cents before the price rise of 127%.

Saudi has slashed its subsidies on electricity as well to cut its spending.

Saudi Arabia due to a large amount of withdrawal from the reserves leaving it to $490 billion. Borrowing from different markets and budget deficit overall in last four years reaching $260 billion has raised many concerns.

About the Author

- Business Graduate, Blogger Enthusiast, Article writing and Research.