Saudi Arabia has announced Monday that it has approved increase in value added tax (VAT) from 5% to 15% starting July 1, 2020, to mitigate the effects of COVID-19 on its economy.
The cost of living allowance, meanwhile, will also be suspended beginning June 1, reported Saudi Press Agency.
“Cost of living allowance will be suspended as of June first, and the value added tax will be increased to 15% from 5% as of July first,” SPA said, citing statement of the Ministry of Finance.
Finance Minister Mohammed Al-Jadaan said the twin measures are part of efforts to shore up state finances.
Earlier, he said that Saudi Arabia would have to take “strict and painful measures” to deal with the impact of the global pandemic coupled with historic drop in world oil prices.
“Current actions taken to date to cut spending are not enough, and Saudi public finances will need more control and the journey ahead is long,” he said.
The number of COVID-19 cases in the kingdom stands at 39,048 as of Sunday.
