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.


World boxing champ Amir Khan eyes Kingdom for new academy

Updated 14 min 38 sec ago
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World boxing champ Amir Khan eyes Kingdom for new academy

  • The former boxing world champion said there were a lot of warriors in Saudi Arabia
  • Khan said he believes the Kingdom possesses a lot of talent

RIYADH: British-Pakistani boxer Amir Khan wants to open a boxing academy in Saudi Arabia, and hopes the Kingdom will see rising stars become Olympic champions soon.

Speaking at the Misk Global Forum in Riyadh on Wednesday, he said the only way to achieve this was by opening academies in the Kingdom.  

“I believe that there is so much talent in Saudi, but there aren’t many boxing clubs,” he said.

Speaking at the midday session of the forum in a session titled “What Defines Me,” Khan said he believed there was a reason Saudis are good boxers: “Maybe it is in their blood – they are warriors.”

The former world champion and Olympic medalist, arrived on stage at the event wearing traditional Saudi clothes, both the thobe and shomakh, and was interviewed by Lubna Al-Omair, the first Saudi female Olympic fencer.

Khan has a charitable foundation in his name that is dedicated to empowering disadvantaged young people globally.

“All around the world I build boxing academies, (including in) England, Pakistan,” he said. “It is a way to give back and help the less fortunate. We travel all around the world to help the poor, the youth ... in the future they will do the same.”

Khan credited his father for placing him in a boxing club. “When I was young, I was hyperactive, always misbehaving, and my father took me to the boxing club. Boxing gave me discipline.”  

And he credited fans for his motivation, explaining: “At 17 I became a household name and couldn’t walk the streets without people stopping me for a picture. People are looking up to me and wanting me to succeed, and that was my motivation.”

Khan said boxing helps develop self-discipline and emotional intelligence. “Boxing teaches you to be disciplined,” he said.

“What boxing teaches you is not to fight outside. If a fight is taking place, I walk away.”

Khan also had advice for athletes in training: “The harder you work in the gym, the easier it will be in the game,” he said.

And he added: “Work hard and never give up. I always like to work harder than my opponents.”