Saudi Arabia to increase VAT from 5% to 15% from 1st June

Saudi Arabia is tripling its value-added tax (VAT) as part of austerity measures to support its coronavirus-hit economy. Saudi Arabia's state news agency has said that VAT will be increased from 5% to 15% as of 1 July. The cost of living allowance will be also be suspended from 1st June, in order to shore up state finances. The oil-rich Saudi Arabia is reliant on income from energy production and has suffered as the impact of the pandemic has forced down global energy prices. State spending outstripped income, pushing the kingdom into a $9 billion budget deficit in the first three months of this year. This was in line with oil revenues during the period falling, by almost a quarter from a year earlier, to $34 billion, pulling down total revenues by 22%. At the same time, Saudi Arabia's central bank saw its foreign reserves fall in March at their fastest rate in at least two decades and to their lowest level since 2011. The kingdom first introduced VAT two years ago as part of efforts to cut its reliance on world crude oil markets.