ECONOMIC SHOCKS: SAUDI ARABIA INTRODUCES VALUE ADDED TAX

ECONOMIC SHOCKS: SAUDI ARABIA INTRODUCES  VALUE ADDED TAX

                By:

Nurudeen Dauda
       January 9,2018
nurudeendauda24@gmail.com
nurudeendauda24@yahoo.com
nurudeendauda.blogspit.com

Saudi Arabia has a population of 27million people with 9.4million barrels daily crude oil production. Saudi like other oil producing countries has been affected by the fall in the price of crude oil at the international market .

Gulf Cooperation Council a group of countries, namely: Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Bahrain and Oman in 2016 following short falls in oil revenue have agreed to introduce a value-added tax across the region in 2018 in order to reduce their dependence on it.Saudi Arabia and United Arab Emirates introduce VAT for first time.The 5% levy is being applied to the majority of goods and services.The tax kicked on in 1 January, 2018 in both countries.

The government of Saudi Arabia from 2016 to date has adopted series of measures in order stabilize its economy from the shocks in crude oil price. "Saudi Arabia, the world’s top oil exporter, roughly doubled domestic gasoline prices last week as part of reforms aimed at diversifying its economy...."(Daily Trust,January 8,2019).

The government of Saudi Arabia went to the debt market in 2017, the first in 25 years. The loan was Saudi Arabia's first international debt issuance since 1991, when it raised around $1bn in the aftermath of the Iraqi invasion of Kuwait. In October ,2017 it raised $17.5 billion in conventional bonds, its first international sale ever, and in April it issued a $9 billion Islamic bond. it raised $12.5 billion in September, 2017 from international investors, the third time it has tapped global bond markets in less than a year.

The Saudi Arabian government raised domestic energy prices by as much as 40% for fuel and 50% for Gas in 2016 with a record budget deficit of $98bn. The budget deficit was the “highest” in the history of Saudi Arabia, but was not as big as some expected.The International Monetary Fund had projected a deficit of $130bn. Subsidies on Diesel, Kerosene and Water were also cut with hike in prices of electricity.

Private economists have estimated the government will raise about 40 billion riyals in 2018 through VAT. The government did not announce how much money it expected to make from the gasoline price hike, but previous statements by officials have suggested it would be in the tens of billions of riyals.

However,  the  government of Saudi is proposing a package of handouts to Saudi Arabian citizens to compensate them for cost of living increases which will cost the government about 50 billion riyals ($13.3 billion) in this year, the information minister was quoted as saying.

The Saudi government has been making serious effort towards diversifying its economy away from crude revenue. Let's diversify our economy.

Popular posts from this blog

ISRAEL V. PALESTINE :THE HYPOCRISY OF TWO STATES SOLUTION

ISRAEL V. PALESTINE :THE HYPOCRISY OF TWO STATES SOLUTION                             By:                 Nurudeen Dauda                October 19, 2023 nurudeendauda24@yahoo.com nurudeendauda24@gmail.com nurudeendauda.blogspot.com "The hottest place in Hell is reserved for those who remain neutral in times of great moral conflict"-Martin Luther King, Jr. Permit me to add my voice on the ongoing massacre of women, children, and armless civilians in Palestine. In my thought, it is not about who triggers the present massacre of the Palestinians , but it is time to talk about the 76 years of massacre of women, children, and the armless civilians of Palestine by the state of Israel which is being watched helplessly by the entire world. Before 1948, the Jews worldwide lived predominantly outside Palestine.They lived predominantly in easter...
Read more

INDEPENDENT CANDIDACY ON THE WAY

INDEPENDENT CANDIDACY ON THE WAY                                By:                          May 19th, 2023 nurudeendauda24@yahoo.com nurudeendauda24@gmail.com nurudeendauda.blogspot.com Barring any last minute changes a "bill" for the recognition of an independent candidacy will be transmitted to Mr president for his "assent". In my thought, if the "bill" is finally "signed" into law it will largely "checkmate" the "excesses" of "governors" and "moneybags" politicians who often denied "credible" candidates "tickets"in order to pave ways for their "anointed" ones no matter their weaknesses. In our modern day politics, we have had enough cases where "credible", "competent", and "popular" candidates loss primary elections due to lack of "money" or "godfather" or state governor's anointment.  In my thought, allowing independent...
Read more

ZAINAB'S ORDEAL: A CASE OF INSTITUTIONAL WEAKNESSES

ZAINAB'S ORDEAL: A CASE OF INSTITUTIONAL WEAKNESSES                         By              Nurudeen Dauda                May 5, 2019 nurudeendauda24@gmail.com nurudeendauda24@yahoo.com nurudeendauda.blogspot.com To begin with, there is now an alleged "drug cartel" in our airports which specialised in planting drugs on unsuspecting airtravellers. Of the six alleged members of the drug cartel arrested in connection with planting of Tramadol in a bag bearing Zainab Habibu Aliyu's name, three were said to be "clearing agents", two were said to be staff of a"security company" and one a staff of an "airline handling company". In my observation, the arrest of Miss Aliyu in the Kingdom of Saudi Arabia in respect of 2000 packs of "Tramadol" said to be found in a bag bearing her name has nothing , but succeeded in exposing our institutional weaknesses.Heads shoul...
Read more