Saudi to slap 5pc tax on fuel

Manama : Saudi Arabia plans to impose a 5 per cent value added tax on gasoline from January 1, 2018, the Saudi tax department said on one of its Twitter accounts.

The announcement on a special VAT Twitter account set up by the General Authority of Zakat and Tax came in response to a question from a Saudi citizen.

“The VAT rate of five per cent for petrol will be applied starting January 1, 2018,” GAZT said.

The previous week the authority had indicated the local transport of passengers and goods within Saudi Arabia, and associated services would be subject to the standard 5 per cent VAT rate, with businesses collecting the tax from travellers upon purchasing the travel ticket.

However, it said that the international transport of passengers and goods will be zero-rated according to the Unified VAT Agreement for the Gulf Cooperation Council (GCC) and the VAT Implementing Regulations.

Separately the kingdom is also said to be working on a mechanism for fuel price increases that could take effect by the end of the year.

New details of the value added tax, set to be implemented in both the UAE and Saudi from next year, are being revealed in both countries ahead of implementation.

All Arabian Gulf countries have committed to implement the Unified Agreement for Value Added Tax, but nations are moving at different paces of implementation, raising doubt about the possibility of a harmonious introduction of the levy. According to PwC each GCC state establishes its own separate national legislation with detailed compliance requirements and rules outlined in each respective legislation.