Saudi Arabia plans to introduce VAT in 2018 the Finance Ministry has confirmed.
It will join most of the other five Gulf Co-Operation Council (GCC) states in imposing Value Added Tax to help cope with the collapse of the global oil price. The price of a barrel of oil has dropped from $130 to $44 (today) in two years.
The potential VAT rate will be 5%. It is expected that many essential foodstuffs will be excluded, and heath and education.
VAT for the GCC states was first seriously proposed over ten years ago, but a number of attempts in the past at gaining agreement on a harmonized regime – like the EU’s – across the GCC had failed.
At the same time, it has been confirmed that there will be no income tax introduced.