Residents of the energy-rich region had long enjoyed a tax-free and heavily subsidised existence but the collapse in crude prices since 2014 sparked cutbacks and a search for new revenue.
The Saudi finance minister, Mohammed al-Jadaan, said in a statement that people would be taxed as part of the ambitious reform plan. A 5% levy will apply to certain goods following an agreement with the six-member Gulf Cooperation Council in June last year, the Khaleej Times reported on Monday.
Al Jadaan sought in a statement carried by state news agency SPA to allay concern that people would be taxed as part of the ambitious reform plan. Saudis currently do not pay any income tax , nor are Saudi companies taxed on their profits. He also said a value-added tax planned for 2018 would “not be raised above 5 per cent before 2020”.
The six-nation Gulf Cooperation Council is aiming to introduce a 5 per cent value-added tax at the start of next year to raise non-oil revenues. But economists and officials in some countries have said privately that simultaneous introduction in all countries may not be feasible.