Saudi Crown Prince Mohammed bin Salman, Deputy Prime Minister and Minister of Defense, said on Tuesday that the Kingdom had no plans to introduce income tax and a decision last July to triple value-added tax to 15% was temporary.
The Kingdom had tripled VAT to offset the impact of lower oil revenue on state finances amid the pandemic.
“Raising VAT was a painful measure and I hate to hurt any Saudi citizen, but it is my duty to build Saudis a long-term sustainable future,” he said in an interview aired on Saudi TV to mark the fifth anniversary of Vision 2030.
“Raising VAT to 15% is a temporary decision that will last one to five years and then it will go down to between 5% to 10%,” he said.
He explained that a third of Saudi Arabia’s population are not Saudis and “with the huge economic growth, the population number grows as well as the number of foreigners, and in 2030, 2040 it might reach 50 percent foreigners, 50 percent Saudis.”
“If we do not set VAT, especially with the opening of the tourism and targeting 600,000 tourists, there will be a lot of leakage of these subsidies,” he went on to say.
“So, the 10 percent, the 5 to 10 percent will ensure that the cash that the foreigner benefits from what’s consumed. That will go back to their government and the government will spend it in education, health, infrastructure or even salaries and other things from the other aspects,” he said.
“Either we change everything, or we change all our objectives, and we regress in terms ... or go back on all our dreams to satisfy people for three or four years and then we just drop them, or we take actions that may be a bit harsh for a short bit of time and then things will pick up again,” stated Crown Prince Mohammed.
“Nobody was expecting coronavirus and we’re trying to take the needed policies to reduce the impact of this pandemic and to maintain our opportunities for a sustainable growth,” he emphasized.
“One of my first priorities is to have a stable finance, a strong one that can be sustained or not be exhausted,” he added.
