07.06.22

Saudi Arabia will consider reducing VAT “ultimately”

Saudi Arabia introduced VAT at a 5% rate in 2018. This was later tripled to 15% in 2020 to shore up finances hit by low oil prices, when the COVID-19 pandemic hit global demand.

The Saudi government has spent 1 trillion Riyals from the national reserves in the last five years. At the recent World Economic Forum 2022, the Minister of Finance, Mohammed al-Jadaan stated, “We will ultimately consider cutting the VAT but at the moment we are still replenishing the reserves”.

Additionally, the Minister has pointed out that the Kingdom is in the final stages of drafting its fiscal sustainability policy, which ensures the reverses do not fall below a certain percentage level of GDP.