The Saudi Finance Minister explains the reason for increasing the value-added tax and canceling the cost of living allowance

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The Saudi Finance Minister explains the reason for increasing the value-added tax and canceling the cost of living allowance

Saudi Finance Minister Mohammed Al-Jadaan

Saudi Finance Minister Mohammed Al-Jadaan confirmed that the austerity measures announced on Monday aim to preserve the country’s financial ability to enable the economy to recover from the Corona virus crisis with minimal losses.

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Saudi Arabia raises value-added tax from 5% to 15%

Al-Jadaan said, in an interview with “Bloomberg” agency published Monday, that the announced measures to provide 100 billion riyals aim to put the public finances in a state that allows them to support the economy, which is preparing to exit from the precautionary measures taken to contain the spread of the Corona virus.

He added: “We have considered a large number of options and their effects economically, financially and socially,” noting that these measures, according to the opinion of the team of economists and other experts, will be the least harmful to the economy and the financial strength of the country.

He stressed the authorities’ intention to continue reforms “despite everything that is happening around the world”, as well as its efforts to maintain financial capacity, reserves and financial balance, so that the state, with the exit from the Corona crisis, will have tools to support the economy and provide health care to the people.

He added: “We are now cutting expenditures and reorienting the expenditures so that they remain within the prescribed budget.” He pointed out that the state has allocated large sums to support the economy, the private sector and the health care sector.

Regarding the increase in the value-added tax from 5% to 15%, Al-Jadaan said that this measure “would help during this year, but it will help more in the year that follows, and the year after, after our exit from the Covid-19 crisis.”

On the abolition of the cost of living allowance, he made it clear that it would not be reflected in the “citizen’s account” because the move was originally temporary, and he said: “We had previously announced that it would be temporary, so we saw that we could actually stop it … its effect is very limited.”

Source: Okaz newspaper





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