A total of $9.3bn (SAR35bn) in revenue is expected to be generated in the first year of Value Added Tax implementation in Saudi Arabia, an expert has said.
The imposition of VAT will help to raise tax revenues of the Saudi government to be utilised for infrastructure and developmental works, Hamoud Al-Harbi, the project manager of VAT at General Authority of Zakat and Tax (GAZT), told the Emirates News Agency (WAM).
Hamoud added that VAT will help address challenges and sustain growth in the kingdom in the long–term.
He also affirmed that punitive measures will be strictly used against companies who have not yet registered for the tax, as well as for those in violation of the laws set in place as of 1 January, 2018.
The Ministry of Commerce and Investment has announced that in cooperation with the General Authority for Zakat and Tax it will intensify inspection tours in markets and commercial firms across the kingdom to track down irregularities during application of the VAT.
The tax is imposed by Saudi Arabia within the framework of a unified agreement endorsed by the member states of the Gulf Cooperation Council (GCC).
Saudi Arabia has already imposed an excise tax of 100% on tobacco products and energy drinks, and 50% on soft drinks.