Saudi Arabia and UAE are no longer ‘tax free’.

Value Added Tax (VAT) has been introduced for the first time in Saudi Arabia and United Arab Emirates.

Most things and services are taxed 5 percent.

There are a large number of foreign workers in Saudi Arabia and the United Arab Emirates and these countries have been attracting them by giving them the trust of tax free life.

But the impact of the reduction in oil prices has also started falling on the treasures of these countries and these countries are taking various steps to fill it.

The steps taken with the intent to increase revenue have come into effect from January 1 in both the countries.

United Arab Emirates (UAE) estimates that income from VAT in the first year will remain around 12 billion dirhams.

Now in these countries, VAT has been started on petrol, diesel, food, clothes, daily commodities and hotel bills.

But medical treatment, financial services and public transport are excluded from the tax.

Will not look like income tax
More than 90 percent of Saudi Arabia and 80 percent of revenue in UAE comes from oil industries.

Several steps have already been taken to increase the government fund in both the countries.

Taxes will be imposed on tobacco and soft drinks in Saudi Arabia, but some subsidies will be given to local people.

Road tax has been increased in the United Arab Emirates and Tourism Tax has been implemented.

But there is no plan to tax income on so far.

Other members of the Gulf Cooperation Council – Bahrain, Kuwait, Oman and Qatar have repeatedly vowed to implement VAT. However, some countries have already postponed it till 2019.