Saudi Arabia should double VAT to 10%
- Sep 13, 2019 | Richard Asquith
The International Monetary Fund (IMF) has recommended that Saudi Arabia doubles its VAT rate from 5% to 10%.
The IMF stated that, with continued depressed oil prices, the kingdom’s deficit is set to continue to grow. It should therefore consider raising its standard VAT rate to 10%.
Saudi Arabia introduced VAT in 2018. It did so following agreement in 2017 with the five other members of the Arab Gulf Cooperation Council to implement a harmonised VAT union. To date, only Saudi, UAE and Bahrain have introduced the indirect tax regime. Bahrain is expected next; Qatar and Kuwait remain uncommitted on dates.
If Saudi were to move ahead with a rate raise, the IMF suggests it do so in coordination with the other Gulf states. This could mean delaying any rise until at least 2022 as the remaining states launch their VAT regimes.
Latest Saudi news
July 29, 2019
Saudi Arabia’s General Authority of Zakat and Tax (GAZT) has dropped the requirement for foreign VAT-registered businesses to appoint a local fiscal representative. The measure was implemented on 18 July 2019....
October 5, 2018
The Saudi Arabian tax authority has published guidance on the reverse charge rules for B2B supplies provided by non-residents. As with most VAT regimes,...
April 23, 2018
Following the 1 January 2018 launch of 5% VAT in Saudi Arabia, over 4,700 violations have been found from 12,578 audits of businesses. The...
February 15, 2018
The International Monetary Fund (IMF) has declared that the Arab Gulf states of Bahrain, Qatar, Oman and Kuwait will not be prepared for the...
January 30, 2018
The Kingdom of Saudi Arabia is relaxing the requirement to produce simplified invoices for B2C sales under the new VAT regime. Initially following the...
January 14, 2018
Saudi Arabia has reclassified privately provided education as zero-rated for VAT from standard rated. The change will match the classification of non-state supplied education...