The Saudi Arabian crown prince has stated that the 1 July 2020 VAT rise from 5% to 15% may be reversed in the future.
Saudi VAT trebling to 15% July 2020
The trebling of VAT was brought in to shore-up government revenues at the height of the COVID-19 first lockdown when demand for oil dried-up and duties plunged. But crown prince Mohammed bin Salman said this week that once revenues have re-established themselves, the VAT hike may be reversed to some degree – perhaps cut to 10%. He also confirmed that there were no plans for the introduction of income tax.
5% VAT was implemented in 2019. It was part of a six-Gulf state agreement to create a VAT and Customs Union. So far, only UAE, Bahrain and Oman (16 April 2021) have also introduced VAT. Their standard rates remain at 5%.
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