Upcoming Saudi VAT Spike May Lead to Short-Term Rise in Consumer Spending
Saudi Arabia’s decision to triple is value-added tax rate could lead to a spike in consumer spending before the new rate takes effect July 1, according to a May 11 KPMG post. This could lead to a rise in sales…
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in Saudi Arabia's automotive, retail and electrical markets, the post said. While companies in these markets might see a short-term increase in sales, businesses will likely need to take measures to remain competitive in the Saudi market after the new rate takes effect, including potentially absorbing part or all of the VAT increase so “goods and services are affected as little as possible,” KPMG said. Companies should also review VAT clauses in their contracts. Despite Saudi Arabia’s VAT increase, the United Arab Emirates has no plans to raise its VAT rate, according to a separate KPMG alert.