Saudi Arabia will eventually consider reducing Value Added Tax – Finance Minister

Saudi Arabia will eventually consider reducing Value Added Tax – Finance Minister

The Finance Minister of Saudi Arabia, Mohammed Al-Jadaan said that, the Kingdom will ‘ultimately’ consider reducing the rate of VAT (Value Added Tax), but for now we are still refilling the reserves. 

The Value Added Tax in Saudi Arabia was raised to 15% from 5% in the year 2020. The VAT rate was tripled then to support the finances hit by low oil prices, as the Corona virus pandemic hit global demand.

– While speaking to Reuters on the sidelines of World Economic Forum in Davos, Al-Jadaan said, We are in the final stages of designing our fiscal sustainability policy, this policy would ensure that reserves would not be less than a certain percentage of the level of Gross Domestic Product (GDP).

– The Minister of Finance confirmed that the number that the reserves will not be less than, it will be in the double digits, he said that the excess funds can go to the Public Investment Fund (PIF), the Kingdom’s $600 billion sovereign wealth fund and National Development Fund (NDF).

– The net foreign assets of the Saudi Central Bank at the end of March amounted to 1.63 trillion riyals. According to the Budget document, it is expected that the government reserves in the Saudi Central Bank will reach 350 billion riyals by the end of the fiscal year 2021.