The Saudi cabinet on Monday (January 30th) approved an International Monetary Fund-backed value-added tax to be imposed across the Gulf following an oil slump, AFP reported.
Residents of the energy-rich region had long enjoyed a tax-free and heavily subsidised existence but the collapse in crude prices since 2014 sparked cutbacks and a search for new revenue.
Saudi Arabia is the world's biggest oil exporter and the largest economy in the Arab region.
It froze major building projects, cut cabinet ministers' salaries and imposed a wage freeze on civil servants to cope with last year's record budget deficit of $97 billion.
It also made unprecedented cuts to fuel and utilities subsidies.
The kingdom is broadening its investment base and boosting other non-oil income as part of economic diversification efforts and aims to balance its budget by 2020.
Cabinet "decided to approve the Unified Agreement for Value Added Tax" to be implemented throughout the six-member Gulf Co-operation Council (GCC), the official Saudi Press Agency said, adding that a royal decree has been prepared.
A 5% levy will apply to certain goods following a GCC agreement last June.
