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.


Gruelling Dakar Rally route through Saudi Arabia’s ‘captivating’ deserts revealed by Sports Authority

Updated 25 April 2019
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Gruelling Dakar Rally route through Saudi Arabia’s ‘captivating’ deserts revealed by Sports Authority

AL-QADDIYA: More details about the Dakar Rally expected to take place in January 2020 in Saudi Arabia were released on Thursday by the Kingdom's General Sports Authority at an event in Al-Qaddiya.

The race starts on Jan. 5 in Jeddah, with the drivers set to race through Al-Madinah, Tabuk and Ha’il regions before a having a rest day in Riyadh. From the capital, the route winds its way back toward the coast through the Asir region and ends in the city of Al-Qaddiya on Jan. 12.

Speaking at the event, the chairman of the General Sports Authority (GSA) Prince Abdul Aziz bin Turki Al-Faisal announced a 10-year partnership with the Dakar Rally, saying: "We want the world to see the captivating desert of Saudi Arabia and to get to know the good and hospitable people of the Kingdom that looks forward to receiving the world.

“Our country is extremely passionate about sport and our strategic goal is to feed that appetite as we move further towards achieving Vision 2030 of which sport is a basic pillar.

“In hosting Dakar Rally we aim to produce an unbelievable and unforgettable experience for drivers as they discover the beauty of Saudi nature and a unique spectacle for motorsport fans not only in Saudi Arabia but also in the region and around the world.”

It was announced earlier this month that the race would be held in Saudi Arabia, and for the first time in the Middle East.

The Dakar has been held in South America since 2009. The gruelling multi-stage rally was previously held in Africa but was relocated after terrorist threats in Mauritania in 2008.

Prince Khalid Bin Sultan Abdullah Al-Faisal, chairman of the Saudi Arabian Motor Federation, said when the race announcement was made: “I have always wanted to participate in Dakar Rally, while I wasn’t fortunate to achieve that ambition, I’m now part of achieving a much bigger dream for my country as Dakar comes to the Middle East region for the first time ever.”

CEO of Qiddiya project Michael Reininger said: "Qiddiya will soon become the centre of the motorsports world by virtue of an unparalleled collection of on track and off road facilities and a set of experiences and events that have never been assembled in one place before.”

The CEO of the rally's organizing company, Amaury Sport Organization, Yann Le Moenner thanked the princes for their commitment to bringing the rally to Saudi Arabia, adding: “Crossing the best deserts of the world has always been in the DNA of the Dakar, to discover and share.”

Meanwhile, the drivers involved in the rally have been in Saudi Arabia soaking up local culture and experiencing some of the desert landscapes they will drive through in January.