VAT to be increased from 5% to 15% and other financial measures implemented by Saudi Arabia to overcome the challenges and protect the economy. The Minister of Finance and Acting Minister of Economy and Planning, Mohammad AlJadaan highlighted the current issues. More details below.
VAT to be increased from 5% to 15% and other financial measures
The Minister added that the steps are necessary and measures will protect the residents of Saudi Arabia. The Global Pandemic has caused issues for every country in one way or another. But it has impacted negative or economic growth. The unplanned expenses to support the healthcare sector and preventive measures have had an impact on the economy. But Saudi Arabia has maintained jobs for people and provided maximum support.
The main highlighted approved measures to mitigate the requirements are as below:
- The impact of the approved measures is around 100 billion Saudi riyals; including canceling, extending, or postponing some operational and capital expenditures for some government agencies, as well reducing provisions for the initiative of a number of Vision Realization Programs and major projects for the fiscal year (1441-1442) -(2020).
- Cost of Living Allowance shall be discontinued as of June 2020.
- VAT or Value Added Tax shall increase from the current 5% to 15% as of July 2020.
- Also, to improve spending efficiency, a ministerial committee has been established to study the financial benefits paid to all employees, contractors and those of similar status who are not subject to Civil Service Law in government ministries, institutions, authorities, centers, and programs, and present its recommendations within 30 days.
Source: SPA, 2020
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