Saudi triples VAT rate in austerity push to counter oil slump, virus

Saudi Arabia will triple value added tax and suspend a cost of living allowance for state workers, it said on Monday, seeking to shore up finances hit by low oil prices as the coronavirus pandemic pummels global demand for its lifeline export.

“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,” said Finance Minister Mohammed al-Jadaan.

“These measures are painful but necessary to maintain financial and economic stability over the medium to long term…and to overcome the unprecedented coronavirus crisis with the least damage possible,” he added in a statement.