Saudi Arabia may cut VAT after COVID crisis
- Nov 22, 2020 | Richard Asquith
The Saudi Arabian government has said it considering reversing the trebling of VAT from 5% to 15%. This would only happen once the coronavirus crisis is over. The aim would be to boost the economy which was hit by a sharp rise in the inflation rate to 6.1% after the rise in the consumption tax. The IMF estimated the country’s economy could shrink by over 5%, with a government budget deficit of $11 billion.
The VAT rate was hiked in July 2020. This was to help rebalance government revenues following the drop in oil prices. The state was the only country to introduce a VAT rise during the crisis – check Avalara’s COVID VAT measures tracker.
Saudi Arabia originally introduced VAT in 2018 as part of six-country Arab Gulf plan to create a VAT and Customs Union.