5% sales tax in Saudi and UAE introduced; $21 billion collection 2018

Gulf, Jan 02: From Monday value-added tax has been introduced in Saudi Arabia and United Arab Emirtaes. A 5 % sales tax applies to most goods and services and analysts project that the two governments could raise as much as $21 billion in 2018, equivalent to 2% percent of GDP.

Saudi Arabia has deposited billions of dollars in special accounts to help needy citizens face the resulting rise in retail prices.

The other four Gulf states -- Bahrain, Kuwait, Oman and Qatar -- are also committed to introducing VAT but have delayed the move until early 2019.

None of the Gulf states levy any personal income tax and none have any plans to do so.

The International Monetary Fund has repeatedly urged Gulf states to diversify their revenues away from oil, which accounts for more than 90% of the Saudi budget and 80% in the UAE.

Both Riyadh and Abu Dhabi asked all companies with earnings of $100,000 or more a year to register in the VAT system.