Tripling of VAT in Saudi ArabiaTripling of VAT in Saudi Arabia

Executive Summary

• Saudi Arabia had announced several austerity and revenue generation measures on 10th May 2020 to shore up its finances in a low oil price environment. The tripling of Value Added Tax (VAT) rate from 5% to 15% was one of them. The tax levy came into effect on 1st July 2020. However, the government would bear VAT on education, private healthcare and first house bought by the citizen, provided its cost does not exceed SR850,000.
• The steep increase in VAT seems to have impacted consumer behaviour before and after its implementation.