It also cut allowances for state workers, calling the measures 'painful but necessary'. FMTNews SaudiArabia
RIYADH: Saudi Arabia will triple its value added tax rate and suspend a cost of living allowance for state workers, it said on Monday, seeking to shield finances hit by low oil prices and a slump in demand for its lifeline export worsened by the new coronavirus.
“The cost of living allowance will be suspended as of June 1, and the value added tax will be increased to 15% from 5% as of July 1,” Finance Minister Mohammed al-Jadaan said in a statement reported by the state news agency. The minister said non-oil revenues were affected by the suspension and decline in economic activity, while spending had risen due to unplanned strains on the healthcare sector and the initiatives taken to support the economy.
Central bank foreign reserves fell in March at their fastest rate in at least 20 years and to their lowest since 2011, while oil revenues in the first three months of the year fell 24% from a year earlier to US$34 billion, pulling total revenues down 22%. About 1.5 million Saudis are employed in the government sector, according to official figures released in December.
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