No income tax, but VAT starts in 2018

Saudi Minister of Finance Ibrahim Al-Assaf. (AP)
Updated 05 May 2016
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No income tax, but VAT starts in 2018

RIYADH: The Kingdom does not plan to introduce income tax for individuals, but value-added tax (VAT) would be introduced by 2018, according to Saudi Finance Minister Ibrahim Al-Assaf.
Al-Assaf said Wednesday in a statement that the decision to introduce VAT had been agreed upon at the 102nd meeting of GCC finance ministers in Riyadh. The discussions had taken place at a gathering of the Committee on Financial and Economic Cooperation, which includes ministers from other GCC states.
The decision was based on an agreement taken by the Supreme GCC Council earlier this year to introduce VAT in the six GCC countries, said Assaf. It was agreed that VAT would be introduced by 2018.
Al-Assaf said VAT, which would be imposed on certain commodities, was much easier to administer than other taxes, many of which were easy to evade.

In an interview with The Economist in January, Deputy Crown Prince Mohammed bin Salman, second deputy premier and defense minister, had indicated that VAT would be introduced but no income, or wealth taxes. “We’re talking about taxes or fees that are supported by the citizen, including VAT and the sin tax. They will create good revenues, but not the only revenues,” he was quoted as saying. Other reports indicate that the GCC bloc would introduce VAT of up to 5 percent. The tax would exclude 95 food items, but would be applicable for all citizens and residents. Health, education and social services would likely be excluded.
Introducing VAT is considered a major economic reform in the GCC countries, which have minimal tax systems and no tax on income, although some levy fees such as road tolls.
To limit smuggling and damage to competitiveness, analysts say, the Gulf countries should introduce VAT regionally rather than individually, at different times.
According to analysts, VAT could provide a number of benefits to the GCC countries. If levied at a rate of 5 percent, it could yield anywhere from 0.8 percent to 1.6 percent of gross domestic product, depending on the country.


Comoros minister praises Muslim World League's development work

Muslim World League Secretary-General Mohammed bin Abdul Karim Al-Issa distributes aid packets among poor families in Comoros. (SPA)
Updated 28 min 17 sec ago
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Comoros minister praises Muslim World League's development work

  • The league’s contribution to the medical field totaled SR6,948,032
  • The league established six educational institutes more than 30 years ago

Comoros’s Minister of State for Foreign Affairs, Hamid Karhila, has commended the development efforts carried out by the Muslim World League (MWL) in his country. 

He also expressed his government’s gratitude to the MWL for its initiative launched by Secretary-General Muhammad bin Abdul Karim Al-Issa.

Karhila said during a visit to the headquarters of the International Association for Relief, Care and Development (IARCD): “The new Comorian government aims to keep this cooperation with the MWL. This would help achieve more developmental and humanitarian projects that serve the Comorian people.”

Secretary-General of the IARCD Abdul Aziz Sarhan said: “The Muslim World League will continue to provide assistance and stand with the needy in all countries around the world.”

Sarhan said that the association carried out various humanitarian, medical and relief projects in the Comoros at a cost of SR10,916,645. These projects benefited 1,104,969 people between 2006 and 2017.

The league’s contribution to the medical field totaled SR6,948,032, which benefited 971,333 people. 

The league established six educational institutes more than 30 years ago. These institutes graduated thousands of students who occupy some of the highest positions in the Republic of the Comoros.

The MWL is also building a mosque at a cost of SR200,000 and working on the construction of an artesian well that cost SR130,000, as well as two surface wells at a cost of SR20,000.