Saudi Arabia, UAE introduce VAT for first time

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Arabia

MNA Business Desk: Saudi Arabia and the United Arab Emirates (UAE) introduced the Value Added Tax (VAT) for the first time from Monday.

It is a five per cent tax on most goods and services to boost revenue. The VAT will be applied on food, clothes, electronics and gasoline, phone, water and electricity bills, as well as hotel reservations, reported news agency.

Some outgoings were exempt from the tax or given a zero-tax rating, including medical treatment, financial services and public transport.

The UAE estimates that in the first year, VAT income will be around 12 billion dirhams ($3.3 billion).

In Saudi Arabia, more than 90 per cent of budget revenues come from the oil industry while in the UAE it is roughly 80 per cent. Both countries have already taken steps to boost government coffers.