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Saudi Arabia and the United Arab Emirates introduced value-added tax from today, a first for the Gulf which has long prided itself on its tax-free, cradle-to-grave welfare system.
Saudi Arabia compounded the New Year blow for motorists with an unannounced hike of up to 127 per cent in petrol prices with immediate effect from midnight.
They are the latest in series of measures introduced by Gulf oil producers over the past two years to boost revenues and cut spending as a persistent slump in world prices has led to ballooning budget deficits.
The five percent sales tax applies to most goods and services and analysts project that the two governments could raise as much as USD 21 billion in 2018, equivalent to 2.0 percent of GDP.
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