The United Arab Emirates and The Kingdom of Saudi Arabia from today that is Monday has launched the value-added tax—the first time ever Gulf has introduced this tax system before this it has since years practised the tax-free system for promoting the welfare.
Saudi Arab like Pakistan welcomed the New Year with a price hike in the petroleum products. It introduces a rise in the petroleum prices by one hundred and twenty-seven percent with an immediate implementation from the midnight.
The five percent sales tax has been applied on majority of the products and services. As per the analysts, the two governments might raise the prices as much as $21 billion in 2018 which is equal to two percent of GDP.
This implementation would for sure be bringing in change for the two super-wealthy Gulf nations. The other Gulf states like Kuwait, Oman, Bahrain and Qatar have also the plans of launching VAT but have agreed to delay the decision until 2019.
The rise in the fuel duty is for the second time in two years span by the Saudi government. But still the petroleum prices the Kingdom offers are among the lowest offered in the world.
High-grade petrol price increased by one hundred and twenty-seven percent from twenty-four cents a litre to fifty-four, while the low-grade petrol rose by eight-three percent from twenty cents a litre to thirty-six and a half.
The duty on the kerosene and diesel remained unaltered.
Saudi Arab is in mid of introducing reforms for balancing its books by raising revenues and cutting spending’s. Last month, owing to this need it dropped the government subsidy on electric bills resulting in a hike in the electricity prices.
Riyadh posted the budget deficits nearing around $260 billion over the span of last four financial years and it does not expect to balance the figures up until 2023.
For raising the piling public debt, the Saudi Arab government has taken out $250 billion from its reserves over the last four years, leaving them to an amount of $490 billion.
The Kingdom has also borrowed some amount nearing $100 billion from the other local and international markets.