Saudi Arabia to impose 5 per cent VAT on petrol

Kingdom's General Authority of Zakat and Tax Authority announces tax to come in from January 1, 2018, on Twitter

Saudi Arabia will introduce a 5 per cent tax on petrol.

Saudi Arabia will slap a 5 per cent value added tax on gasoline from January 1, 2018, the kingdom's tax authority said on its twitter feed on Sunday.

The General Authority of Zakat and Tax Authority made the announcement on one of its twitter feeds dedicated to the value added tax in response to a question from a member of the public.

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All Arabian Gulf countries have committed to implement the Unified Agreement for Value Added Tax, but nations are moving at different paces of implementation, raising doubt about the possibility of a harmonious introduction of the levy. According to PwC each GCC state establishes its own separate national legislation with detailed compliance requirements and rules outlined in each respective legislation.

Only Saudi Arabia and the UAE have published VAT laws and are committed to implementing the levy on January 1, 2018. Other states have yet to announce dates for introducing the tax or a timeline for publishing the VAT laws.

GCC countries are implementing the tax in the aftermath of the steep slide in oil prices that began in 2014 in order to help shore up battered public finances. Saudi Arabia has also been tapping international debt markets to borrow billions of dollars over the past year. It's also planning to sell a stake in Aramco, the world's biggest oil companies as part of its efforts to lessen its reliance on oil revenues.