Saudi Arabia Raises Taxes, Slashes Subsidies Amid Pandemic
Saudi Arabia’s finance minister on Monday announced that his government would next month triple the country’s value-added tax on goods and services – from 5% to 15% – and as of July halt monthly stipends to citizens due to a budgetary crisis caused by plunging oil prices amid the coronavirus pandemic. Riyadh in 2018 introduced the VAT in an effort to generate an income stream independent of oil sales, which account for some 70% of the kingdom’s annual revenue. Billions of dollars in funds were also previously allocated to the public as part of a “cost of living allowance.” Oil prices have cratered by about two-thirds since the beginning of the year as demand has plummeted in parallel to nationwide lockdowns imposed globally. The decision comes as Saudi King Salman nevertheless authorized nearly $500 million in support for families during the ongoing Muslim holy month of Ramadan.