Middle East

Saudi Arabia, UAE introduce VAT for first time


Riyadh, Jan 1 (IANS): Saudi Arabia and the United Arab Emirates (UAE) introduced the Value Added Tax (VAT) for the first time from Monday.

It is a five per cent tax on most goods and services to boost revenue. The VAT will be applied on food, clothes, electronics and gasoline, phone, water and electricity bills, as well as hotel reservations, the BBC reported.

Some outgoings were exempt from the tax or given a zero-tax rating, including medical treatment, financial services and public transport.

The UAE estimates that in the first year, VAT income will be around 12 billion dirhams ($3.3 billion).

"The imposition of VAT will help to raise tax revenues of the Saudi government to be utilised for infrastructure and developmental works," said Mohammed Al-Khunaizi, a member of the Shoura (consultative ) Council.

Organisations such as the International Monetary Fund have long called for Gulf countries to diversify their sources of income away from oil reserves.

In Saudi Arabia, more than 90 per cent of budget revenues come from the oil industry while in the UAE it is roughly 80 per cent.

Both countries have already taken steps to boost government coffers.

In Saudi Arabia, this included a tax on tobacco and soft drinks as well as a cut in some subsidies offered to locals. In the UAE, road tolls were hiked and a tourism tax was introduced.

But there were no plans to introduce income tax, where most residents pay zero per cent tax on their earnings.

The other members of the Gulf Cooperation Council -- Bahrain, Kuwait, Oman and Qatar -- have also committed to introduce VAT, though some have delayed plans until at least 2019.


Comment on this article

  • Vincent Rodrigues, Bengaluru/Katapadi

    Tue, Jan 2 2018

    This will effect the savings of expatriates and increase in their cost of living too

    DisAgree Agree [9] Reply Report Abuse

  • Af,,, Mangalore

    Tue, Jan 2 2018

    Modi is slowly bringing Gulf earning into taxable income.

    DisAgree [1] Agree [7] Reply Report Abuse

  • Ibrahim, Udupi

    Tue, Jan 2 2018

    Expatriates helping the country in boosting its economy. Now,it is hightime to give citizenship after five years of work to those expatriates who work,invest and help in building the country as in US and Europe.

    DisAgree Agree [8] Reply Report Abuse

  • Don, Mangalore

    Tue, Jan 2 2018

    Besides VAT the Saudis & Emiratis have doubled the price of ordinary gasoline, and for the higher grades of gas the cost is more than double.

    DisAgree Agree [9] Reply Report Abuse

  • Kevin, Mangalore

    Tue, Jan 2 2018

    VAT is a regressive tax. Research has consistently proved that the poor pay a higher share of their income in VAT than the rich. This is due to the Marginal Propensity to Consume (poor people spend a higher proportion of their income, rich people save a higher proportion). The large Indian population which is middle class and working class will be disproportionately affected VAT.

    Meanwhile , the New York Times reported Saudi Crown prince bought a $300 million dollar chateau in France, 500 million dollar yacht and a $450 million dollar Leonardo Da Vinci painting.

    DisAgree Agree [3] Reply Report Abuse

  • Don, Mangalore

    Tue, Jan 2 2018

    That's exactly why the Governments of Saudi & Emirates introduced VAT and not GST, HST or other Corporate Taxes. They main purpose of the tax is get money out of the employed so that they spend all their money locally, and that will reduce the flow of foreign exchange from leaving the country by many billions of dollars in the long run.

    In the years to come expatriates will spend most of their monies locally and their savings will be far lesser going forward. By the way Income tax which will be a direct deduction from your pay in the next step.

    DisAgree Agree [4] Reply Report Abuse

  • Al, canada

    Tue, Jan 2 2018

    all Indians and phillipines expatriates will end up paying for the arbabs to enjoy at the cost of poor labourers hard earned money. no one likes to go to those places to work if the living cost is higher than the pay. All arbi;s has to start working and make thier living. Olden days are at the door steps of all these nations like camel rides, dates, shrimps, spice trades etc.

    DisAgree [1] Agree [8] Reply Report Abuse

  • A. S. Mathew, US

    Mon, Jan 1 2018

    Due to the very high oil price, the oil producing countries had the heyday for forty years. Now, even with the united front effort with the non-OPEC nations, the oil price is not going up, thus the oil producing countries are sliding to red ink every year.

    Venezuela with her largest oil reserve of close to 300 billion barrels and natural gas reserve is now faced with hunger and sickness, they are crossing the border to Chili and the neighboring nations for mere survival.

    The GCC countries will be forced to impose many taxes upon the residents there for their mere survival, just the beginning.

    DisAgree [2] Agree [19] Reply Report Abuse

  • j.anata, Mangaluru / Bengaluru

    Mon, Jan 1 2018

    Dear Gulf Residents, be ready to shell out more. Income Tax is also on its way there

    DisAgree [2] Agree [27] Reply Report Abuse

  • Melwyn D'souza, Italy/Mangalore

    Mon, Jan 1 2018

    VAAT lag gayi mithron !!!!!

    DisAgree [2] Agree [54] Reply Report Abuse

  • Aravind, Blr

    Mon, Jan 1 2018

    Indirect taxation is in a way better than direct taxation as the people who buy expensive items would be taxed more rather than the ones buying Staples.

    DisAgree [1] Agree [22] Reply Report Abuse

  • Manju, Mumbai

    Mon, Jan 1 2018

    When I was on project Visa in Kuwait they told me that tax and interest are haram.
    They are now becoming modern.

    DisAgree [14] Agree [45] Reply Report Abuse

  • Ahmed K. C., Mangalore

    Mon, Jan 1 2018

    Interest is harem not the tax.
    You asked the wrong person.

    DisAgree [25] Agree [48] Reply Report Abuse

  • Avinash, Mangalore

    Mon, Jan 1 2018

    Mutual Fund investments are subject to market risk. Please read the offer document carefully before investing

    DisAgree [2] Agree [13] Reply Report Abuse

  • Ahmed, Bangalore

    Mon, Jan 1 2018

    The one who said Tax is haram to you may be he/she is an illiterate, but definitely Interest is haraam.

    DisAgree [21] Agree [30] Reply Report Abuse

  • Rocks, Mangalore

    Mon, Jan 1 2018

    Exactly . .. i do agree... Intrest is haram!

    DisAgree [6] Agree [17] Reply Report Abuse

  • Kishore Kumar, Mangaluru

    Mon, Jan 1 2018

    Saudi Prince Mohammed bin Salman has unveiled plans for a luxury Red Sea beach resort

    DisAgree [2] Agree [18] Reply Report Abuse

  • Alwyn, Canada

    Tue, Jan 2 2018

    Manu, what is not haram. Life itself is haram. Survival of life is most important than religion. So don't put your nose in this now,

    DisAgree Agree [8] Reply Report Abuse

  • Kishore Kumar, Mangaluru

    Mon, Jan 1 2018

    This is the beginning, wait for more in coming days... 💰 💰 💰

    DisAgree [2] Agree [34] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Mon, Jan 1 2018

    They should have started with GST ...

    DisAgree [19] Agree [20] Reply Report Abuse

  • medwin, mulki

    Mon, Jan 1 2018

    probably they dint ask Rahul's view.

    DisAgree [15] Agree [32] Reply Report Abuse

  • Jossey Saldanha, Mumbai

    Mon, Jan 1 2018

    Rahul said GST is good but implemented by Idiots ...

    DisAgree [25] Agree [63] Reply Report Abuse

  • Karthik Karkera, Maryhill Mangalore

    Mon, Jan 1 2018

    Everyone knows that Pappu is the biggest Idiot, it's proven.

    DisAgree [69] Agree [35] Report Abuse

  • JAGDISH, mumbai

    Mon, Jan 1 2018

    Now our seculars will say that " Since Saudi Arabia and Uae is a islamic country and the VAT is not Haram and its Holy " In india we see bunch of slaves doing drama every day in streets for GST. TRIPLE TALAQ,DEMONETIZATION.Common morons start your argument

    DisAgree [35] Agree [26] Report Abuse

  • Reshmi Salian, Mangalore

    Mon, Jan 1 2018

    Difference between India and Middle East Countries is whatever tax collected in the middle east goes for the welfare of their people and in India it goes to the pockets of politicians and government servants. So, there is no point in comparing Indian tax with Middle East Tax.

    DisAgree [9] Agree [81] Report Abuse

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