Riyadh – Mubasher: Saudi Arabia will increase the rate of the value-added tax (VAT) from 5% to 15% as of July 2020, Minister of Finance and acting Minister of Economy and Planning, Mohammad Al Jadaan, announced on Monday.

‏Moreover, the cost-of-living allowance will be discontinued as of June 2020, Saudi Press Agency (SPA) reported.

This comes as the Saudi government has decided to reduce expenditure and increase revenue sources, as part of measures aimed at protecting the Saudi economy, and overcome the unprecedented financial and economic ramifications of the coronavirus (COVID-19) global pandemic.

According to the minister, the COVID-19 crisis led to lower global oil prices and a sharp decline in Saudi oil revenue, while precautionary measures resulted in the suspension of many local economic activities, which had a negative impact on non-oil revenue and economic growth.

A ministerial committee has been established to study the financial benefits paid to employees, contractors and those who are not subject to the civil service law in government ministries, institutions, authorities, centres, and programs.

The committee is set to present its recommendations within 30 days.