RIYADH:
Saudi Arabia is ready to implement a region-wide value-added tax, the cabinet
said on Monday, giving final approval to the measure which will take effect
next year.
Cabinet
"decided to approve the Unified Agreement for Value Added Tax" to be
implemented throughout the six-member Gulf Cooperation Council, the official
Saudi Press Agency said. "A Royal Decree has been prepared," it said.
A five-percent levy will apply to certain goods following a GCC agreement last
June. The move is in line with an International Monetary Fund recommendation
for Gulf states to impose revenue-raising measures including excise and value
added taxes to help their adjustment to lower crude oil prices which have
slowed regional growth.
The
GCC countries have already agreed to implement selective taxes on tobacco, and
soft and energy drinks this year. Regional residents had long enjoyed a
tax-free and heavily subsidised existence. Saudi Arabia froze major building
projects, cut cabinet ministers´ salaries and imposed a wage freeze on civil
servants to cope with last year´s record deficit of $97 billion.
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