Saudi Arabia’s cabinet on Monday approved the GCC agreement for imposing a value added tax (VAT) from next year, the state news agency announced.
In a session chaired by King Salman in Riyadh, the council of ministers gave its official approval to the measure, confirming that the kingdom is ready to implement it, said Saudi Press Agency (SPA).
Under the plans, a five percent levy will apply to certain goods following an agreement signed by the six-nation Gulf Cooperation Council last June.
The move is in line with an International Monetary Fund (IMF) recommendation for Gulf states to introduce further revenue-raising measures to help adjust to low oil prices that have hampered their economic growth.
Many GCC countries have already agreed to impose taxes on cigarettes and soft drinks this year.
Saudi Arabia’s 2017 state budget also recommended a five percent VAT from 2018.
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