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Once famous for being tax-free, Saudi Arabia has announced it is trebling its Value Added Tax (VAT) from 5% to 15% and cancelling the monthly living subsidy from next month.
FEED THE POOR
Feeding the poor and needy is an act that draws us closer to Allah. We earn His forgiveness, mercies and blessings through this act of charity.
“Anyone who looks after and works for a widow and a poor person is like a warrior fighting for Allah?s cause, or like a person who fasts during the day and prays all night. (Bukhari)
The moves come as global oil prices have crashed down to less than half what they were a year ago, slashing government revenues by 22% and putting major projects on hold.
Saudi Aramco, the state oil company, has already seen its net profit fall by 25% in the first quarter of this year, mainly due to the collapse in crude oil prices.
“These measures reflect a drastic need to rein in spending and to try to stabilise weak oil prices,” says Gulf analyst Michael Stephens. “The Kingdom’s economy is in a terrible state and it will take some time to recover any sense of normality.”