RIYADH: Saudi Arabia will reconsider its current value-added tax rate once the government’s financial position improves, Finance Minister Mohammed Al-Jadaan told a press conference in Riyadh following the approval of the state budget for 2022.
When asked about the issue of taxation and its impact on investors, the minister said that the Zakat, Tax and Customs Authority applies the law and the policy comes from the government.
“If investors are unhappy with their taxation level, the system gives them the right to file a complaint or objection,” he added.
VAT was hiked in July 2020, a month after the cost of living allowance was suspended. The move was aimed at shoring up state finances, which were being battered by the twin impacts of low oil prices and the pandemic.
Crown Prince Mohammed bin Salman said in an interview in April that the VAT increase was a temporary measure.
“It will continue for a year, a maximum of five years, and then things will go back to what they were. We are targeting it to be between 5 and 10 percent, only till we reinstate our balance after the pandemic,” he said.
Saudi Arabia’s income from VAT will contribute around 43 percent of non-oil revenue in 2021, up from 25 percent last year and 14 percent in 2019, Jadwa Investment estimated in October.