Taxes

Previously, the member states of the Cooperation Council for the Arab States of the Gulf (GCC) were known as tax-free countries. Taxes were neither applied to goods and services sold in the countries nor to residents’ income. However, this has changed, primarily to reduce budget deficits amid fuel subsidies and low crude petroleum prices in 2015.

In June 2016, the member states of the GCC signed the Unified Agreement for Value Added Tax of the Cooperation Council for the Arab States of the Gulf. This contains the general principles and rules on the Value Added Tax (VAT) agreed at the GCC level. Under this agreement, the GCC member states pledged to introduce a 5% VAT rate.

On January 1, 2018, Saudi Arabia’s government implemented the 5% VAT for all goods, including diesel.

On July 1, 20