Riyadh — Saudi Arabia has no plans to reduce the value-added tax rate (VAT) soon; Minister of Finance Mohammed Al-Jadaan has said.
“The decision on VAT will be reviewed when the public finances improve,” he said, speaking to Asharq News television channel on the sidelines of the G20 summit in Rome.
Al-Jadaan said the goal of the increased VAT rate was to deal with the economic repercussions of the coronavirus pandemic. “When the public finances improve, most likely within five years, it will be re-examined, but there will be no VAT cut anytime soon,” he said.
Saudi Arabia raised VAT from 5 percent to 15 percent in May 2020 as part of austerity measures to support its pandemic-hit economy.
The Saudi budget, estimated at SR6.7 billion, recorded the first quarterly surplus in its third-quarter since early 2019. The surplus revenue resulted from a 60 percent increase in oil income on an annual basis; along with a limited decline in public spending, according to data released by the Ministry of Finance on Sunday.
Al-Jadaan underscored the Kingdom’s emphasis on maintaining rationalized spending despite the increase in revenues.
He stressed that Investment in fossil fuels is essential for the world economy. However, the real challenge is not in oil but in gas. The price of gas has shot up by 500 percent in Europe.
Al-Jadaan added that 80 percent of the world depends on conventional energy. “In my opinion, the Kingdom is an influential country in energy markets. Our goal is to strike a balance between supply and demand and to ensure energy supplies to the markets,” he said.