Riyadh, May 11 (efe-epa).- Saudi Arabia will increase its value added tax (VAT) from five to 15 percent in July, as part of austerity measures to support the economy amid the novel coronavirus.
Saudi Finance Minister Mohamed al-Jadaan said in a statement that starting in June, the country will also cut its cost of living allowance, which was ordered by King Salman bin Abdelaziz for public servants and military personnel two years ago.
The coronavirus pandemic has taken a toll on the country’s revenues, requiring the government to reduce expenditure and impose measures to support non-oil revenues’ stability, according to al-Jadaan.
“These measures are painful but necessary and will be beneficial to maintain financial and economic stability from a comprehensive perspective over the medium and long term,” explained al-Jadaan.
The measures also included reducing allocations for some projects that are part of Vision 2030, a plan introduced by Saudi Crown Prince Mohamed bin Salman to attract foreign investment and diversify the oil-dependent economy.
These decisions will save 100 billion Saudi riyals ($26.6 billion), according to al-Jadaan.
Saudi Arabia has recorded 39,048 confirmed coronavirus cases, the highest in the Arab world, with a death toll standing at 246.
The country has taken restrictive steps since March to fend off the spread of the respiratory illness, including total lockdowns on several cities, halting religious pilgrimage trips and suspending international and domestic flights.
The coronavirus first came to light in China in December and has since been spreading around the world with nearly 4,118,783 confirmed cases in 187 countries and regions, and a death toll standing at 282,947.
The World Health Organization earlier officially named the disease Covid-19, while the virus which causes it has been called SARS-CoV-2 (changed from its provisional name 2019-nCoV) by the International Committee on Taxonomy of Viruses.