Revista de investigación de economía

VAT a New Move Directing KSAs Development

Sana Naseem and Khan WW

Value Added Tax (VAT) is an indirect tax which is collected by an intermediary (such as a retail store) from the person who bears the ultimate economic burden of the tax (such as the consumer). VAT is usually implemented as a destination-based tax, where the tax rate is based on the location of the customer. In some countries, VAT is known as a goods and services tax (GST), is a type of general consumption tax that is collected incrementally, based on the increase in value of a product or service at each stage of production or distribution. VATs raise about a fifth of total tax revenues both worldwide and among the members of the Organization for Economic Co-operation and Development (OECD). As of 2018, 166 of the world's approximately 193 countries employ a VAT, including all OECD members except the United States, which uses a sales tax system instead. VAT is most common in the European Union (average rate 20%). Forthwith, all Arabian Gulf countries no other than Kingdom of Saudi Arabia (KSA), UAE, Oman, Kuwait, Bahrain, and Qatar determined to implement the unified agreement for 5% VAT, from which KSA & UAE have already applied VAT from January 1, 2018 in bid to narrow deficits