Saudi and Emirates implement VAT to offset lower oil revenues

Saudi Arabia and United Arab Emirates (UAE) launched yesterday for the first time, the added tax (VAT), levied at 5% for most products and services to make up in public accounts loss collection by low oil prices. Products such as gasoline, snuff, food and beverages, insurance, hotels and telecommunications services have increased their prices, affecting the cost of living in both countries, who had never applied taxes. At the same time, Saudi Arabia has carried out a sharp rise in fuel prices, with increases ranging from 83 to 127%, although the cost of gasoline continues to marginal values ​​which is the largest producer of the world's oil. The price per liter of the cheapest gas increased from 0.75 to 1.35 SAR (0.17 to 0.31 euros), while the most expensive type jumped from 0.90 to 2.04 SAR (0, 20 to 0.45 euros). The UAE government hopes to enter this year around 2,774 million euros with the new tax funds that intends to use to provide high quality public services and reducing its dependence on oil and other hydrocarbons. The UAE Minister of State for Financial Affairs Obaid Humaid Al Tayer, ruled out an increase in wages to meet the application of VAT, which he estimates, will have minimal socio-economic impact of 0.68%. VAT does not apply to rental housing or school fees, while financial services, some medical treatments or public transport are exempt. About 80% of budget revenues UAE come from the oil industry, while in Saudi Arabia are over 90%, a factor that has reduced the income of both countries by the decline in oil prices. Both countries decided to take action last October and have already implemented a special tax on snuff and soft drinks. The other members of the Gulf Cooperation Council (Bahrain, Kuwait, Oman and Qatar) have also pledged to introduce VAT, but have delayed plans until at least 2019.

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