Saudi Arabia triples VAT, suspends handouts in virus led austerity drive

Saudi Arabia’s finance minister says the kingdom will triple its Value Added Tax (VAT) and halt monthly handout payments to citizens in new austerity measures amid record low oil prices and a coronavirus-led economic slump.

The measures, which could stir public resentment with the cost of living rising, come as the petro-state steps up emergency plans to slash government spending to deal with the twin economic blow.

“It has been decided the cost of living allowance will be halted from June 2020 and VAT will be raised from 5 percent to 15 percent from July 1,” Finance Minister Mohammed al-Jadaan says in a statement released by the official Saudi Press Agency.

Jadaan insists the measures are necessary to shore up state finances amid a “sharp decline” in oil revenue as the coronavirus pandemic saps global demand for crude.

— AFP