Value Added Tax (VAT) is a relatively new introduction to the Saudi Arabian economy. Before it was implemented in 2018, Saudi Arabia was among a minority of countries in the world without any VAT system. Within this club were several of the Kingdom’s neighbours, including the UAE, Bahrain, Oman, Kuwait, and Qatar. In the year 2016, a ground-breaking agreement was reached by all six nations of the GCC. The Common VAT Agreement promised to usher in a new era with its 5% VAT rate. The purpose behind introducing VAT was to generate additional revenues for the GCC economies and diversify revenue sources. So far, this move has been considered an objective success.
Source: Grant Thorton
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