Saudi VAT impact: Price hike ‘will push consumers to find ways to save money’

Updated 25 November 2017

Saudi VAT impact: Price hike ‘will push consumers to find ways to save money’

JEDDAH: The introduction of value-added tax (VAT) next year will directly impact the prices of commodities and services, analysts said.
“The price increase will reduce the demand for goods, and this will have a negative effect on companies, most of which will likely take several measures to keep their business,” Khalid Al-Zaidi, a financial analyst, told Arab News.
He hoped the price rise would not affect the quality of goods and services. “If it happened, it is a negative indication. However, the price hike will push consumers to find ways to save money,” he said. Businesses must register for VAT by the deadline of Dec. 20, and the official introduction starts on Jan 1.
Al-Zaidi also said there would be a sharp drop in demand for luxury goods and accessories.
He anticipated that companies will be keen to improve their services at competitive prices, especially with the opening of international markets through e-commerce. He stressed that the best service-providers with the lowest costs will succeed in the market, while other businesses will fail.
Al-Zaidi, who is also the director of the Jeddah-based Al-Zaidi Financial Education Center, said that it is possible that the government will impose additional taxes on other products or increase VAT from 5 percent.
“If the results are found to be supportive to the country’s economy and helps citizens to rationalize their consumption habits, additional taxes will be implemented,” he said.
On the up side, Al-Zaidi said that once VAT is imposed on petroleum products, the country will be able to cut domestic consumption of oil products.
“This will help Saudi Arabia increase the quantity of its oil reserves and enable it to increase its export of oil to the international market,” he said.
He added that this could support its global position as an important player in the oil market. “It will also strengthen its oil pricing policy inside OPEC (the Organization of the Petroleum Exporting Countries),” he said.
Al-Zaidi anticipated that small and medium-sized companies will find it difficult to adapt to VAT, making it difficult to significantly reduce their expenses to survive.
As for imposing VAT on private education, Al-Zaidi said that investors in this sector would reduce fees to retain their market share. “Otherwise, their investment would be severely affected,” he said.
Khaldoun Khan, the owner of Al-Corniche International School and Al-Faisal International School, told Arab News that students’ guardians would be affected by the decision, and he would not increase registration fees. He said that his schools would lose some students. “Students have started to join state schools due to the decision,” he said.
Khan said that he would have another look at the profits and consider providing students with attractive offers to keep his business alive. “Unless the government reviews the decision, many school owners will choose to close their schools,” he said.
The General Authority of Zakat and Tax (GAZT) has urged businesses with annual revenues of more than SR1 million ($266,640)  to expedite their VAT registration process and ensure their readiness for its implementation.
More than 60,000 businesses have registered for VAT since registration started on Aug. 28, 2017.
Businesses that fail to register in time will face fines of up to SR10,000 and the suspension of several critical government services, including issuing work permits, changing business activity, issuing visas, transferring workers’ sponsorship and other services provided by the Ministry of Commerce and Industry, the Ministry of Labor and Social Development, the Ministry of Municipal and Rural Affairs, Saudi Customs and the Saudi Arabian Monetary Agency.
The GAZT confirmed that VAT will be implemented on Jan. 1 next year, and that all eligible businesses must be ready and aware of its laws, regulations and requirements — available on the VAT website vat.gov.sa.
The GAZT first imposed a selective tax on energy drinks, cigarettes and soda drinks. It also increased the visit visa fee, exit re-entry fee and dependent fee for expatriates.


Pilgrims to quarantine for 14 days after Hajj

More than 41,361 polymerase chain reaction (PCR) tests have been conducted in the past 24 hours. (SPA)
Updated 04 August 2020

Pilgrims to quarantine for 14 days after Hajj

  • COVID-19 cases in Saudi Arabia continue to fall, officials say

JEDDAH: Pilgrims who took part in this year’s Hajj must continue wearing electronic tags so authorities can track their 14-day quarantine once they return home.

The bracelet is designed to monitor pilgrims’ adherence to quarantine, as well as monitoring and recording their health status through the “Tatamman” app.
Pilgrims were required to quarantine before embarking on the Hajj and wore the bracelets to ensure they were obeying the self-isolation rules as part of strict measures to contain the spread of coronavirus.
The country continues to experience a decline in COVID-19 cases. Recorded infections remain below the 2,000 mark for the 10th day in a row. The Kingdom reported 1,258 new cases of COVID-19 on Monday, raising the number of those infected to 280,093 so far.
There are currently 35,091 active cases and six patients were admitted to critical care units, raising the number to 2,017. There were 32 new fatalities, raising the death toll to 2,949.
There were 1,972 new recoveries recorded, raising the total number of recoveries to 242,053.
More than 41,361 polymerase chain reaction (PCR) tests have been conducted in the past 24 hours. The total number of PCR tests conducted to date exceeds 3.47 million.

INNUMBERS

280,093 COVID-19 cases

242,053 Recoveries

35,091 Active cases

2,949 Total deaths

3.47m PCR tests

The Ministry of Health has been carrying out daily visits to health institutions in order to assess their level of commitment to anti-coronavirus measures, such as ensuring that staff adhere to social distancing, wear masks, and adopt the health practices and crisis management mechanisms recommended by authorities to protect patients and staff.
Teams have been dispatched to supervise the compliance of health facilities’ quarantine centers across Saudi Arabia and stepped up their visits to government and private hospitals to ensure their compliance with health protocols, sample transfers and staff testing as well as ensuring that all routine surgeries are stopped.
More than 5,000 violations have been recorded and violators were referred to committees. More than 150 facilities were temporarily shut down by the ministry until the proper protocols were implemented and the violations were fixed. A number of institutions were able to resume operations after settling fines.