Water and Food to be Taxed

When our King raised taxes

we overthrew the monarchy

Saudi Arabia and the United Arab Emirates have introduced a five percent value-added tax (VAT) on many goods and services in an attempt to raise budget revenues amid a global slump in oil prices.

The two Gulf countries had long prided themselves on being minimum tax havens fueled by energy export, but the downturn in the oil market has forced them into taking measures to tackle their huge budget deficits. The two Arab kingdoms will receive up to an estimated $21 billion from the new tax in 2018, equivalent to 2.0 percent of GDP.

The imposition of VAT will help to raise tax revenues of the Saudi government to be utilized for infrastructure and developmental works,” said Mohammed Al-Khunaizi of Saudi Arabia’s Shoura Council, as quoted by Arab News.

The VAT will apply to most products and services, including food, clothing, jewelry, electronics, phone, water and electricity bills, and hotel room bookings. Exceptions include air travel, healthcare, basic surgery and state-funded education. At five percent, the tax is still among the lowest in the world, but the Saudi Ministry of Commerce and Investment announced it will launch inspections to check which businesses don’t comply.

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