As part of the austerity measures adopted in the wake of COVID-19, the Kingdom of Saudi Arabia announced that, as of July 1, 2020, the country’s Value Added Tax (VAT) would rise from 5% to 15%. Deferment of payment of the VAT was extended to businesses for three months, and as of August 28, payments are still postponed until the 30th of September, 2020.
The KSA put forward similar measures back in 2016 to fight falling oil prices, removing subsidies from goods like fuel, and from services like water and electric. In 2018, the original 5% VAT tax was created. The tax was introduced alongside a new living allowance for public sector employees, in an effort to soften the blow.
Saudia Arabia wasn’t alone in introducing the original 5% VAT; other Gulf nations like the UAE and (in 2019) Bahrain. However, Saudi Arabia is the only country so far that moved to raise the VAT to 15%. On top of that, even as the VAT triples, that 2018 living allowance has also been dropped.