Abstract
Oil prices are sometimes on rising and sometimes on fall. Such rise and fall of the oil products have affected the oil producing countries in both, positive and negative, ways. However, nowadays the prices of petromin product are very low due to which GCC countries, including Saudi Arabia, are facing great economic challenges. Now, these countries have decided to implement value added tax on the specific goods and services of their countries, petromin products are also one of those goods. Most of the people and analyst think that this step may be proven as the wrong step for the Saudi government because it will not only raise so many business complications but also will increase the rates of the petromin products. However Saudi government has decided to implement the least VAT on its petromin products due to which they will be able to control the price of products and will enjoy the VAT amount as well. That VAT can be helpful for Saudi Arabia to meet its expenditures and development project. Also, it will help the country to improve its economy further. Now, in this study, primary data and feedback survey from the “Petromin Express” will help to understand the impact of VAT on the petromin products and the strategies of the Saudi government to control its prices.
Chapter 1
Introduction
Since the last two decades, Gulf Cooperation Council (GCC) countries have made some important changing in their economic policies, and that is because of the rising and falling oil prices at international market. Before 2000, the oil rates were high in the international market due to which GCC countries have been enjoying great development in almost all departments. Also, a rapid growth has been observed in different activities of these countries, such as the subsidized provision of water and electricity, low taxation, and soft loans (Fasano and Wang 1-195). Saudi Arabia is also one of the GCC countries, and thus its economy also depends on the oil’s revenues. For a long time, Saudi Arabia and other oil producing countries have been enjoying the great profit from oil revenues and thus have been enjoying the stable and strong economy of the country. In fact, till 2014, the oil barrel was sold at $115. But now these countries are facing great collapse in the oil prices. In 2016, the oil rate reduced to $45 to $50 per barrel which also left a deep impact on Saudi economy. There is a huge difference between $115 and $50, and this collapse has left a deeply negative impact on the Saudi economy (Freeman 1-7).
Saudi Arabia is also an influential member of Opec. The members of Open highly depend on the oil revenues for their domestic budgetary. According to the statistics of Deutsche Bank and IMF, Libya can manage its domestic budgetary with the price of $184 per patrol barrel, Iran $131, Algeria $131, Nigeria $123, Venezuela $118, Russia $105, Saudi Arabia $104, Iraq $101, UAE $81, Kuwait $78, and Qatar $77 per patrol barrel (Fahey; McMahon). These statistics show that Saudi Arabia can manage its domestic budgetary very well if the petroleum price is $104 per barrel. That is why now, with the petroleum rate of $50 to $70 per barrel, Saudi Arabia is facing great economic and domestic budgetary challenges.
Figure 1 Oil Prices Needed to Balance Budget
When going back to the history then the change in oil prices have affected many oil producing countries, especially golf countries. Saudi Arabia is also one of those countries which have been affected by oil shocks. In the twentieth century, Saudi Arabia has enjoyed a pleasant time and strong economy due to the increase in oil rates. In 1973 to 1974, oil rates had 200% increased due to which the GDP of Saudi increased from 53,047 to 159,276 million riyals. Then in 1978 to 1979, oil rates again increased 24% due to which the GDP profit increased from 270,439 to 373,309 million riyals (Algahtani). Then another shock was received in 1990 during the Iraq war, and this time the GDP of Saudi went up to 13%. In the fourth shock again the oil prices increased which caused the increase in Saudi GDP by 17%. In this duration, Saudi GDP reached to 17 trillion riyals. These four shocks were good for Saudi, but after 2010, the oil rates began to decrease. In the fifth shock, oil prices faced a decrease of 38% due to which the GDP fell to 1,384,591 million riyals. Finally in the fifth shock again the oil rates had fallen, and the rates became $40 per barrel which highly affected the Saudi GDP which forced Saudi Arabia to think of the solution to save its economy (Algahtani 124-135).
Figure 2 Affect of Oil Price on GDP
Figure 2 shows the oil price shocks to the Saudi Arabia and its affect on its GDP. It is clear from the figure that in 2015, the fifth shock of the oil price left a very negative impact on Saudi’s GDP. In the first shock of oil price, Saudi GDP was highly increased due to which Saudi Arabia established its economy and became one of the World’s fastest growing economies (Ghamdi). It not only developed its departments but also enjoyed a substantial surplus in trade regarding increase in imports and government revenues. When the Saudi government faced the fall in oil prices, then it also faced the deficits development in its budgetary and the Saudi’s government drew down its foreign assets. In the start when oil prices faced fallen then the Saudi’s government manage they’re budgetary by either cutting their expenditures or by increasing the non-oil revenues. But this is not the permanent solution of the problem that is why the government thought to establish tax system with which Saudi will be able to manage their budgetary in the case of fall in oil prices (Abdelbasset 5-12).
Taxation Policy
Initially, Saudi Arabia established a liberal tax system in 1975. According to this system, all the citizens, companies, and organizations used to pay a religious tax, which is also known as Zakat. According to this tax system, the companies or the citizens were bound to pay 2.5% of their profit as a tax to the government. In the start, the Saudi government decided that this tax policy will be implemented only on those companies which are in Saudi Arabia. It means the foreign companies which have invested their money in industrial projects were exempted from this tax policy and they didn’t have to pay anything to the Government as a tax.
The Saudi government also used another tax instrument, known as customs duties. According to this tax system, the tax was applied to the imported items. However, some items were duty-free, whereas other items carried 12% duties of their total cost.
Subsidizing Policy
When the Saudi Government had benefits from the high oil revenues, then it decides to form subsidizing policy. According to this policy, the aim of the government was to encourage the industrialists and the companies. According to this policy, the government used to lower the prices of selected services and goods in this way the industrialists and companies tried to perform so well. In this way, the competition in non-oil departments or the non-oil revenues increased. Subsidizing policy aimed at ensuring the stable and low prices of the food products. It also aimed to achieve values able social objectives in education and health areas. With the help of this policy, the government used to help the farmers with subsidizing budget to cover their losses (Abdelbasset).
The subsidizing policy, no doubt, proved to be good for encouraging the industrialists but then it also shows some negative impacts on the economy of the Saudi Arabia. When the government had great profit from oil revenues, then it enjoyed its subsidizing policy, but later it caused over utilization of the resources. The subsidizing policy also caused the misuse of public services, such as telephone service, gas, electricity, fuel, and water. Finally, these expenditures created inefficiencies and instabilities in many sectors which also affected the economy of the Saudi Arabia.
Value Added Tax
After 2014, the Saudi government is facing a great fallen in oil prices. Saudi Government has approx $700bn reserved funds in its deep pockets but even then it can tolerate the oil price decrease up to $75 per barrel, but now the rate had been reduced to $50 due to which it is an alarming condition for the Saudi Government. That is why Saudi government has now decided to adopt value-added tax system which will be implemented in 2018. Value added tax (VAT) is an indirect tax on the consumption of services and goods which are paid by the end consumer. Saudi Government has decided to apply VAT on petroleum products, food items, export items, essential medicines, and international services. However, other services and supplies, such as education sales, healthcare items, insurance, and lease of residential property will be exempted from the value added tax (VAT) (Dale).
Now the question arises that why did Saudi government thought to implement VAT on its services and goods, especially when most of the countries have avoided implementing VAT on their finish products. The reason is that now the oil prices are as low as they were twelve years back and now it has become essential for the GCC countries, including Saudi Arabia, to revise their tax policies. According to Saudi Arabia, a standard rate of 5% will be implemented as VAT on the specific services and goods. This tax rate is the least rate as compared to the global average tax rates. The Saudi government has announced that the implementation of VAT will start in 2018.
The Saudi government and other GCC countries have implemented VAT to generate the additional revenue. This revenue will help the government to rebuild its economy. However as far as public’s reaction is concerned, then the public is not happy with the implementation of VAT in Saudi Arabia. Because of this opposition of public, the decision of implementation VAT has been postponed so many times. Moreover, the political leaders of the Saudi Arabia are also not willing for the implementation of VAT which has been the great hurdle for revising tax policies. However, it is assumed by the government of the Saudi Arabia that VAT will be highly beneficial for them and it will help them to stabilize their economic condition and to meet economic challenges (Kuruvilla 2-4).
Framework of VAT
When GCC countries decided to implement VAT on their petroleum products and other goods and services, then each country had to design their framework of VAT. Saudi Arabia also adopted a GCC VAT framework for the country which could be proven as highly beneficial for it. According to the adopted GCC VAT framework, Saudi will implement the standard value added tax rate which will be 5%. However few products and services will be exempted from the VAT, which will be health, education, local transport, and real estate. It means that VAT will not be applicable on all goods and services rather education, real estate, local transport, and health departments will face zero VAT.
According to the GCC VAT framework, member states will have right to exempt the petroleum derivatives, oil sector, and gas sector from the VAT. Similarly, each country will decide that either VAT will be implemented on food product or the products will be exempted from it. Saudi government decided that the local, as well as international transport, will be free from VAT. Moreover, the export items will be exempted from VAT. Now the question arises that what will be done with the financial services of the GCC countries which have implemented VAT in their system. All the financial services, such as money dealing, securities, operation loan accounts, foreign exchange, management loan accounts, trade credit facilities, and other deposit facilities will depend on the decision of member states. It means that member states will decide either to implement VAT on financial services or to exempt it (France-Presse).
The VAT is specially implemented in the business, so they are required to register for value added services purposes, but there are some limits for the registrations. The businesses which are having annual revenue of more than $100,000 then it will be a must for them to register for VAT purposes otherwise the businesses have the option to either register for VAT or not. Now the Saudi government has decided to implement VAT in their country from 1st January 2018, but then the question arises that which departments will face impacts of the VAT implementation. According to the assessment, VAT will impact the finance and accounting, contracts, IT and system, supply chain, tax and compliance, legal structure, Sales and marketing, and human resources departments (Gazette).
Challenges of VAT
GCC countries, especial Saudi Arabia has now decided to implement the VAT on their services and goods which may be advantageous as well as challenging for the government of Saudi Arabia. Due to the opposition of public and the political parties, VAT has been postponed so many times, but now the government has announced its practical implementation on goods and services from 1 January 2018. It is also concluded by the philosophers and analysts that VAT could be proven as an unwelcome shock to the Saudi Arabia because this system is not the best solution for this government.
Although still the government of Saudi Arabia is thinking about the implementation of VAT and thus no precise data has been confirmed by the sources. According to the GCC VAT framework, 5% VAT will be implemented on specific goods and services, especially on the petroleum products with which it is expected that government will earn good amount to stabilize its economy. Although the tax policy is not new for the country because the companies had been paying Zakat and other tax in term of excise duties, still VAT can be challenging for the GCC countries.
The Saudi government has estimated the benefits of VAT implementation. According to them, with the implementation of VAT on specific goods and services, Saudi’s government will earn up to $6.7bn annually which is a huge amount to stabilize its economy as well as for the development of the country (Dudley). However with such estimates, one cannot conclude that this implementation will be highly beneficial for the government because due to the VAT plenty of risks and complications will be faced by companies, industries, and businesses in Saudi Arabia. VAT implementation is not a process of one day or one week rather it is a slow process which will impact the costs, cash flow, and sales of the businesses. According to Deloitte, professional services, full implementation of VAT will take up to three years which is high risk for the businesses.
Another challenge for the Saudi government is that people are unaware of the financial information of VAT which may also be highly risky for the business sector of Saudi Arabia. It is essential that awareness sessions must be given to the companies to have a better understanding with the series of VAT. Moreover, the government will also have to update its complete IT system to manage the finance which will also be a complicated process for the business sector and the government as well (Dudley).
Another challenge will be the development of VAT system, which will be required by every business. This system will be responsible for paying the VAT to the government tax authorities either monthly or annually. In fact, the implementation of the VAT is not only challenging for the Saudi Arabia, but it will create so many complications for all GCC countries. As said by the head of tax and cooperation services of Qatar, Richardson;
“Since VAT is a new concept to the region, businesses and tax authorities in each GCC country will have to recruit and train sufficient staff. Also, governance frameworks may also need to be reviewed and updated to incorporate policies, processes, and controls that comply with VAT legislation.” (Kemp 1)
The objective of Study:
In the last two years, oil prices have been facing great fallen due to which Saudi Arabia has been facing an alarming condition for the stability of its economy. Saudi Arabia and other GCC countries have now decided that the expenditures of the country should be controlled by the implementation of value added tax to the goods and services. The objective of this study is to evaluate the how the implementation of VAT will leave either positive or negative impact on the economy of Saudi Arabia? The study will evaluate that what VAT implementation will be followed by Saudi Arabia and how much VAT percentage will be imposed on the petromin products by the government of Saudi Arabia. Moreover, with the implementation of VAT, the increment is expected on the supply value cost and thus this may cause the increase in the prices of the petromin products. This study aims to evaluate that how the VAT will impact the supply value of the petromin products?
When the government implements VAT on the goods and services, then the business sector will have to pay a huge amount to the government regarding tax. This may be risky or disadvantageous to the business sector. In return, it is obvious that the business sector will get that loss or the VAT expected amount from the end consumers. In this way, the prices of the items may increase by which they business sector will cover its VAT. Now this study will discover the expected increment impact on supply value and its reflection on the finished product.
Research Question:
- What is the assume VAT percentage will be imposed by Saudi Arabia and When?
- What is the expected increment impact on supply Value and how will reflect on the finished product?
- Is Petromin (Ultra 7 20w50) will be affordable to Petromin customers as living expenses, in general, will raise after imposing VAT or customers will shift to other cheaper Brand?
Hypothesis:
H#1 VAT implementation will cause an increase in the products’ rates.
H#2 VAT implementation will affect the petroleum industry which will raise petroleum products’ rates.
H#3 Preventive measures will be helpful to maintain the increase in products’ rates after the implementation of VAT.
The significance of Study:
This study will reveal that how beneficial or disadvantageous could be VAT implementation on services and goods in Saudi Arabia. The main purpose of VAT implementation is to manage the expenditures of the country with the help of received tax. Thus this is study becomes of great significance because examining and analyze that either it will be helpful in stabilizing the economy or will create complications for the business and industrial sector. The people consider that VAT implementation may also cause the extreme raise in the products’ rates but in this study, I will also examine the preventive methods by the Saudi government to manage the item’s prices. In this way, it will be proved that either VAT will cause an increase in item’s rates or not. With this study, one will easily be able to understand the outcomes of VAT implementation on services and goods by Saudi Arabia.
Rationale of Methodology
The study is a qualitative study in which the focus is to get the answers of the research question. Although it is difficult to consult to the Government authorities to have idea about VAT implementation and its impact on the economy of Saudi Arabia, but the conclusion can be drawn after having a survey to the petromin authorities. The participants of the survey will be either from the petromin management or petromin consumers who must have the idea about the impact of VAT on the prices of petromin products and its impact on the economy of the Saudi Arabia. Moreover the participants must belong to Saudi Arabia. The survey will consist of questions of which the answer could be given either by selected one option, from the options provided with the question, or by filling the blank area of the question. In this way the results of the survey will help to conclude that how VAT implementation will impact the economy of the Saudi Arabia.
Limitations and Delimitations:
The purpose of this study is to evaluate that how the implementation of VAT on the petromin products may affect the prices of petromin products. However, it is really quite difficult to have analysis of the impact of VAT on petromin products and its impact on the economy of the Saudi Arabia. This analysis is difficult because we cannot approach any government department to understand the impact of petromin products on the economy of the Saudi Arabia. For this purpose the better approach was to use the internet available data as primary data. Just because of these limitations in the research, the result cannot be declared as 100% authentic.
However to have a better understanding of VAT impact on the petromin products’ prices and on the economy of Saudi Arabia, a survey with the Petromin Express company will be conducted. In this survey, both, the management members as well as consumers will participate. This participation and the feedback of participants will help us to understand that how VAT implementation will raise the prices of petromin products and will it be beneficial for the Saudi government or not?
Layout
This study consists of five chapters. The first chapter will provide the introduction of Saudi’s VAT implementation on services and goods. The second chapter is a literature review which will provide an insight to the literature published about VAT implementation. These literature include the research papers, books, and peer-reviewed journals. With the help of this literature, the reader will understand that how the other researchers have worked to analyze the impacts of VAT implementation. The third chapter is about the methodology in which I have discussed the methodology used for this research and the way in which data is analyzed. The fourth chapter will provide the complete details of the results and findings. This chapter will provide statistical data by which it will be easier to understand the impact of VAT on the products’ prices. The fifth chapter will be the conclusion of the study which will show that how the research questions have been answered and how the results have been examined.
Summary
Gulf Cooperation Council (GCC) countries have made some important changing in their economic policies, and that is because of the rising and falling oil prices at international market. When going back to the history then the change in oil prices have affected many oil producing countries, especially golf countries. Saudi Arabia is also one of those countries which have been affected by oil shocks. Initially, Saudi Arabia established a liberal tax system in 1975. According to this system, all the citizens, companies, and organizations used to pay a religious tax, which is also known as Zakat. According to this tax system, the companies or the citizens were bound to pay 2.5% of their profit as a tax to the government. After 2014, the Saudi government is facing a great fallen in oil prices. That is why Saudi government has now decided to adopt value-added tax system which will be implemented in 2018. Value added tax (VAT) is an indirect tax on the consumption of services and goods which are paid by the end consumer. Saudi Government has decided to apply VAT on petroleum products, food items, export items, essential medicines, and international services. Now this study will evaluate that how the implementation of VAT will leave either positive or negative impact on the economy of Saudi Arabia?
Chapter 2
Literature Review
Every country which is a member of GCC will institute their distinct domestic legislature regarding VAT. So the complete compliance conditions and a set of laws will be sketched in that legislature. Here we shape an outline of the possible common VAT compliance conditions. An innate trait of the VAT is the self-valuation feature; this means that each company which is VAT registered must file, evaluate and recount its VAT commitments and rights, in accord with law, in front of the tax establishments. Further conditions for VAT will contain a required registration for VAT for all companies beyond the compulsory VAT registration limit.Recording of cyclic VAT revenues with the tax establishments (it would be monthly or quarterly). Submitting any VAT due in a definite time and evidence keeping of all business dealings like tax statements, withdrawal transcripts, import and export history, history of merchandises or amenities delivered free of cost or allotted for reserved consumption, zero-valued or VAT relieved goods and consumptions (Dale).
The ambassadors of the affiliate countries of the Gulf Cooperation Council (GCC) set the outline of an official VAT structure through all six affiliated countries with the formal acceptance of a VAT Framework Treaty. This agreement work as the foundation of the national VAT legislature in every affiliated country by specifying some definite rules, which must be obeyed by all associates, however permitting the states to select altered VAT treaties related to some goods and services. VAT will affect a lot of businesses, but it effects especially the buyer and manufacturing goods, technology, mass media and communications, commercial services and property business (Deloitte).
Valued Added Tax Framework Treaty of GCC was approved by Shura Council of Saudi Arabia on 30th January 2017. From six members of GCC who formally declare the acceptance of combined GCC VAT system, Saudi Arabia was the first affiliate to do so. Administrators of the Ministry of Finance of Saudi Arabia declared that the VAT system would be valid from 1st January 2018 and a 5% tax will get applied to specific merchandises as outlined in the GCC treaty. Finance Ministry officers in the area have activated to spread out the manuscript of the VAT framework treaty in the front-runners of important trade sector. The GCC affiliated states have also approved to charge discriminating excise tariffs on tobacco along with sugar containing drinks comprising soft drinks and energy drinks. These excise tariffs are estimated to be commenced in the second half of 2017. On soft drinks, the excise tax will be 50%, and on energy drinks and cigarettes it will be 100% (Insights).
In a report, it was discussed that the draft VAT law was published by the Saudi government based on Unified Customs Law of GCC which delivers the main principles for VAT regime in six countries. Several topics were discussed in detail in the draft law. But many of the regulations are missing about the practical issues like the supply time, nil-rated services or goods, and rules for VAT invoice (Avalara).
A secondary tax is applied on the utilization of a lot of goods and amenities named VAT. This tax is charged by VAT registered companies which make deliveries of merchandises and amenities in the perseverance of their trade. VAT is also charged on the things which are imported from other countries. VAT is charged at any step in the supplied series and is gathered by the companies on behalf of Management. Finally, VAT is acquired and given by the end purchaser. Though VAT will charge to a lot of merchandises and amenities hence there are few possible exclusions: this takes in simple food substances, important drugs, and exportation of things and worldwide services which are estimated to be goods having no value. Moreover, other services for example healthcare, education, trade or rent of domestic property and investment and indemnity are likely to be relieved from VAT (Alshahrani).
The anticipated institution of VAT in 2018 in six affiliated countries of Gulf Cooperation Council which consist of UAE, Kuwait, Saudi Arabia, Qatar, Oman, and Bahrain seems to result in low prices of oil and administrations trying to find expanded means of profit. Conferring to Euro Monitor International’s Industry Forecast Model (IFM), value added tax will effect greatly different buyer trades, and in this way, we will observe its influence on the two largest nations of the area (Saudi Arabia and UAE) and two important businesses of Packed Food and drinks free from alcohol. It is expected that a lot of food stuff would be relieved from value added tax but Gulf Cooperation Council associates still not approved the final contract and the list of relieved things is not verified yet. As a result of this study, we presume that all goods and services will increase about in 5% rate (Marić).
VAT enthusiasm will need companies to consider all of their business developments. Whereas the Saudi Vat Act is not declared yet, Vat Act, exercise and approach are common in almost all VAT structures all over the world, with insignificant differences according to conditions of every state.Traders can initiate to evaluate their aptitude to fulfill these common requirements at this time, bring up to date their valuations for any particular conditions of Saudi Arabia as they become known. Vat aptitude needs reconfiguration of IT systems, which may take a lot of days according to the magnitude of business and processes. Reconfiguration of the system is a long term practice especially for an expanded business, and thus, system promptness and analysis may take a whole year. According to this exploration, arrangements for VAT promptness must be initiated from today (KPMG).
Giesecke & Nhi designed an outline for widespread budget patterning of value added tax structure. Our outline pattern casts a lot of complications in VAT structure as applied by tax organizations. Especially we demonstrate different charges, different exclusions, and multiple amounts of recompense in goods consumers, and multi-production business also. We utilize our outline to show which one is the most complicated Vat structure of South East Asia: that is of Vietnam. We observe the highly economical, business and supplies of simple Vietnam’s complicated VAT structure. We limit the structure only as a fair budget program to one rate and exclusion of optional exceptions. This initiates an increase in collective benefit, on the other hand, it had unfavorable distributional outcomes. These unfavorable distributional outcomes can be easily improved in a small budget to the increase in combined benefit, by the elimination of rice and paddy from the VAT general structure (Giesecke and Nhi).
The government of Saudi Arabia is trying to employ value-added tax from 1st January 2018 and has started active meetings with business corporations to make them aware of VAT implementing in the start of 2018. It is expected that the Saudi Governments will declare the outline of VAT Act at the end of May 2017 and the other guidelines of value added tax are estimated to be distributed for reference in July 2017. The VAT registration procedure will be governed by the Tax Authority’s online automatic filing system (ERAD).The Saudi Government is expected to issue the draft VAT law by the end of May 2017 and the VAT by-laws are expected to be issued for comment in July 2017. The VAT registration process will be managed by the Tax Authority’s online electronic filing system – ERAD.The companies which are working under GCC region must be active to become compatible with the GCC member states of value added tax act.It ensures that GCC trades must introduce a VAT effect valuation steadily to examine the influence of Vat on all of their processes. This evaluation must deliberate the influence of VAT on the following main regions including finance and accounting, IT and arrangements, tax and compliance, the supply chain of products and services, deals, sales and marketing, legal structure and human resources. The evaluation of effects should be used to shape a perfect strategy to the steps that should be taken to be ready for the implementation of VAT on 1st January 2018 (Young).
The Shura Council of Saudi Arabia declares the endorsement of Gulf Cooperation Council (GCC) value added tax Framework Agreement on 30th January 2017. Representatives of the Saudi Arabian Ministry of Finance have revealed that the value-added tax system will be valid from 1st January 2018, and a 5 percent tax will apply on the merchandises and the amenities as suggested in the GCC contract. Bahrain’s Minister of Finance H.E. Sheikh authorized the combined GCC value added tax Framework Agreement and confirmed the anticipation that VAT would be applied from 1st January 2018, after finishing all the legal procedures. Younis Al-Khouri, the undersecretary of the UAE Ministry of Finance, declared on 12th February 2017, that the GCC administrators were preparing initial concurrent approval of value added tax on 1st January 2018 as the expected operation date of VAT.These formal confirmations are in accordance with the same declarations made by administrative officers of other GCC Member States. The written version of the GCC VAT Framework is possible to be accessible early, and it is already being distributed by some states in different business frontrunners in policy making sector of the economy. According to the explained occurrences, companies and trade must believe that value added tax in GCC area will be a real law from 1st January 2018. So the companies only have ten months to make arrangements for VAT application and also confirm compliance with VAT rules in every GCC state in which they work (EY).
International Monetary Fund (IMF) approved the introduction of VAT in KSA mentioning termination of life cross Gulf without VAT. The decision was finalized by Gulf Cooperation Council comprising six states. These states include Kuwait, Bahrain, Qatar, Oman, United Arab Emirates and Saudi Arabia. It is expected that other states of Gulf will introduce this tax by 2018. The step was taken by the support of IMF which recommended the imposition of revenue enhancing measures in Gulf states. The taxes on fizzy drinks and tobacco had already been implemented by the government. According to the official press of Saudi Arab, a Royal Decree was prepared to increase the tax on soda as well as energy drinks and tobacco from 50% to 100%. The tax-free age was enjoyed by the residents of the area when the oil price raised worldwide. But the prices of crude oil fell to half from $114 per barrel in 2014 to $55 in 2016. So, the main exporters of crude oil pronounced some severity measures last year. Then main infrastructural projects were ceased, salaries of ministers were reduced, and wage freeze was imposed on some civil employees. The budget insufficiency was controlled by managing budget from 98 billion dollars to 79 billion dollars from 2015 to 2016.Some extraordinary cuts were made by the state to fuel and value subsidies, to balance its financial plan by 2020 (RT News).
Finance minister of Saudi Arabia, Al-Assaf mentioned that it was not planned by the Kingdom to introduce tax at the individual level, but VAT will get introduced in 2018. The decision was finalized in Riyadh, in a conference of GCC funding ministers.It was based on a contract of the Supreme GCC Council to publicize VAT in six GCC states. The VAT tax is easier to be administered as compared to other taxes and get executed on a few commodities. Income or wealth taxes are not applied, but only VAT is introduced, as indicated by Deputy Crown Prince Mohammed bin Salman. Good returns will be created with the help of VAT, and they will be supported by citizens of the KSA. About ninety-five food items are excluded from the tax, and the tax will be valid for residents as well as citizens. Education, health, and communal services are also excluded from VAT. The introduction of VAT is considered as a crucial reform for the economy of GCC states where minimal taxes are applied with no income tax, while some toll fees like road taxes are functional. According to experts, VAT should be applied regionally instead individual application, to reduce smuggling and impairment to competitiveness. Analysts mentioned some advantages of VAT for GCC states (NEWS).
The implication of value added tax structure in UAE will not only affect the buyers, but it will widely influence the trades also. After the declaration that UAE will also apply VAT in the state, different concerns are raised concerning to the charge of trades and readiness of suppliers for the suggested enactment date which is 1st January 2018. Some of the company holders stated that they need more time to be familiar with the new structure of tax or to restore their financial structure and functioning system. Industrialists are now looking at the traders for merchandises and amenities they use to flourish their business, to reveal the aftereffects of Vat. It is essential to put in more workforce to simplify the tax collection is another problem to solve out (Maceda).
Initiating the value added tax can offer a lot of welfares to states affiliated with Gulf Cooperation Council. Value added tax at a rate of 5% may results in revenue of 0.8 percent to 1.6 percent of the gross domestic product (GDP) of every state. If VAT is applied successfully, it will increase the compliance on the tax system. Moreover, it will provide officers with complete data about the developments which take place in the present economy, and as a result, it can enhance the clarity and simplify the enlargement of aimed economic strategies. The IMF and the World Bank suggested that the states affiliated with the Gulf Cooperation Council must collaborate with one another and fix a particular VAT ratio. There are a lot of options present for the private companies to unite with governments on different VAT employment aspects, for example, collection of VAT from banks, mandating other aspects (Fraihat).
Ainsworth and Alwohaibi, discussed in their study that a five percent Value Added Tax will be implemented community wide in 2018, in six GCC states. The framework of VAT was anticipated to be available until October 2016. The main observation about VAT was that it was based on the credit-invoice plan of Europe and expected to be destination based. The Intra-Gulf transactions will be effectually zero-rated by the traders, and the purchaser’s VAT will be fixed to the destination authority. But the directing mechanism of this deposit is still not mentioned that it will be with the help of custom mediators, reverse charge procedure of the buyer like used in EU or through seller’s diminution of VAT right to the overseas reserves. The study focuses on the zero-rating implementation of VAT at intra-gulf transactions. The two main traditional approaches to shape order for placing this rule in a community are a custom-controlled or accounting-controlled strategy. But the current strategy being followed in some states is technology controlled. This paper vies that the VAT in Saudi Arabia VAT will get advantage from history, and will be ideally suited to demonstrate the VAT civically, how to practice real-time equipment to resolve some of the utmost problematic cross-border trade complications (Ainsworth and Alwohaibi).
According to Saudi Gazette, the agreement for the VAT framework was published officially on 21st April 2017 and KSA became the first GCC state to publish its VAT law draft. The draft was published in two languages that are Arabic and English. An electronic form of the draft was issued by the Zakat and Tax General Authority on the website to collect the comments of the public about the draft VAT edict. The feedback submission deadline is mentioned as 29th June 2017. A questionnaire is included in the consultation system to evaluate the effectiveness of VAT implementation for KSA businesses. As it is expected that VAT will get introduced in 2018, so many things are discussed in the draft. It includes necessities on the obligation of tax, taxable individuals, supplies of possessions and services, the abode of supply, exempted and zero rated materials, taxable worth, imports, the deviousness of tax, process, administration, drawbacks, and fines. The executive rules will be supplemented in the draft VAT law of KSA, which are still not issued and they will deliver further detail on the VAT handling of particular goods and business sectors (Saudi Gazette).
The states of GCC were considering certain taxes for introduction on the community in a period of extraordinary oil prices. They were always mentioned in the international surveys as low taxation states. Until now the main role of each country was to provide maximum benefits to their citizens instead of extracting taxes from the residents. But now several factors are pressurizing the government to take into account the tax issue. The study focuses on the historical background of the tax issue over past two decades. It mentioned that the issue had been considered serious due to fluctuations in oil prices. In the late 90s, international organizations started to raise the issue along with domestic organizations (MARTIN HARRISON).
The article by Keen & Lockwood, investigates the bases and aftereffects of the noteworthy increase in the value added tax (VAT), examining what has made its acceptance, and especially, whether it has demonstrated a particularly real form of tax policy. At first, it was revealed that a tax improvement, for example, the initiation of a VAT, decreases the minimal rate of community assets it might direct towards an improving management to enhance tax rate. This indicates towards the valuation, in a board of 143 states for 25 years, of a method explaining both the chance of VAT acceptance and the profit impression of the VAT. The outcomes lead to a gorgeous amount of causes of VAT acceptance, and towards an important but intricate influence on profit rate. The evaluation proposes, uncertainty, that a large number of countries which implement a VAT have added an operational tax mechanism in this way, yet this is less evident in sub-Saharan Africa (Keen and Lockwood).
Karen in a report mentioned that a bill was passed by the parliament of Bahrain in 2009, about imposing a tax on large scaled projects, in the state by the overseas investors. But the notice was revised eliminating the GCC and local investors in contradiction to the rules of “World Trade Organization.” IMF recommended the implementation of the bill in 2009, in Oman as its implementation was delayed by adjoining countries. Oman was commended by IMF to contrivance and scrutinize the outlays and welfares of executing VAT. Then the finance mentor of “UAE Prime Minister” suggested 2012 as the deadline for implementation of VAT in GCC states. Enormous pressure was faced by the governments of Oman and UAE from IMF, for implementation of VAT (Karen).
Tanzi in his study mentioned that to develop a synchronized structure of excises and VAT the agreement was done in several aspects by the GCC commissions. As main of the customs income is lost due to FTAs, so to replace this loss a 5% VAT will be quite attractive for the government. It can be implemented by following the experience of EU, to prevent any frauds. But the final decision is still pending, and ministers were asked to research on effects of the tax in different situations and sectors. There could be chances of several constraints due to weak administration and how the resources will get distributed in states like UAE. The study focuses the background of restructurings required for VAT and design issues along with the assessments based on available data (Tanzi).
It is normal to explain profit entitlement for small industries programs by restraining the business size. This article records the outcomes of value added tax verge in JAPAN, concentrating on the invitation of an expanded business to “masquerade” as a lot of small companies by individually combining business sectors. A difference of the company size supplies before and after the VAT institution of 1989 indicates a grouping of companies under the verge, an example which is recognizable in the developmental responses. To overcome the confusing outcomes of the modifications in the company features over the years, we implement a partial parametric mass disintegration method. This analysis submits that the impersonating actions by companies might normal in other conditions (Anji).
The effect of reduction in tariff charges and the introduction of a varied tax system on a budget of Saudi Arabia was discussed in this report. An assessable broad equilibrium model founded on a collective accounting matrix for 2000 was established for this analysis. According to results, the welfare effects of the introduction of different tax systems will be minimum along with the fluctuations in real absorption. If there is a need to increase the resources for investing in human capital or infrastructure, then the government should reduce the household intakes initially. Without the introduction of VAT or any other taxes, the outcomes could be more fruitful if other falsifications are removed. The economic policy should focus on specifically designed schemes for proper use of revenue as generated by the increase of oil prices (Chemingui).
VAT is a value added tax implemented at each phase of production and is not accumulated in cash registers. It is liked by the people as a proper way of financing governments of bigger countries. It is also liked as it has causes destruction to the economy as related to income tax. The revenue generated from VAT can be used to simplify tax and social safety reforms. It is also believed that VAT can reduce the deficit of trade. But on the other hand, it is disliked by many as it helps to expand government size in some cases (Daniel Mitchell).
Chapter 3
Methodology
This study is conducted to analyze how VAT implementation will affect the price of petromin products in Saudi Arabia. For this purpose, this paper includes the breakdown of the primary data available on the internet via books, journal articles, and other peer reviewed sources. For this study, the pattern will be both, the meta-analysis and the feedback survey too. For this meta-analysis so many internet articles, books, and other sources were selected to understand the implementation of VAT and its impact on Saudi economy. However, I selected few of them to understand the future prediction about the prices of petromin products in future.
One of the steps in my research was to get approval for my survey. By getting the format of the application, I started to work on my consent form. I needed to make sure that participants are aware that all their rights are protected. They also have to know that this survey is anonymous so they do not worry that their information can be revealed to anyone. Participants have to be older than eighteen years old. If any of the participants will have any questions for my advisor or me, there is our contact information too.
Firstly, I made sure that participants of my survey are either from petromin management or petromin customers and they belong to Saudi Arabia. The reason for that is that only the petromin management or the customers can have an idea about the impact of VAT on petroleum products’ prices. Another question was about the age. The purpose of this question is to know that the participants are older than 18 years because younger than 18 are not mature enough to understand the impact of VAT on petroleum price. Another important question which is of great importance is to know what do the participants think about the VAT implementation, either it’s a good action taken by Saudi government or not.
The major purpose of the study is to understand the VAT impact on the prices of petroleum products, so the next question was to know that what do participants think about the increase in prices of petroleum products and VAT impact on it. This question will help to get the answer to our first research question which is how much VAT implementation is responsible for the increase in the price of petromin products. The final question was that either people are satisfied by the preventive measures taken by the Saudi government to control the increasing rates of petroleum products or not. This question will be helpful to have an answer of the third research question.
When I was creating my survey, my main goal was not to make it too long. More specific it is, better answers I will get. When people are getting tired of doing a survey they do not finish it, or they just answer not thinking just to finish faster, and this part was challenging for me because originally I had around fifty questions. Going through this process, I have learned how to be able to concentrate specifically on your topic and emphasize only the questions that have a direct correlation with my topic.
Then, the part that took a lot of time for me to understand is how to formulate questions that a participant had a clear understanding of what I am asking. Also, just in case the question was not that specific I was adding parenthesis next to it where I was specifying what I am talking about. For example, when I had a question where I said:” What do you think about VAT implementation, either it’s a good step by Saudi government or not?” The first question that arises is that what is VAT? To avoid such questions I had just selected the participants from petromin management and consumers. The main focus of the company was a petromin company, named “Petromin Express.” The company is situated at Riyadh.
Data Analysis
The best way to analyze my survey results is by using STATA (Data Analysis and Statistical Software for Professionals) because by having more than 100 participants it will be harder to use Excel to organize my data. First, I need to make sure that people finished taking their survey and I will get rid of participants that are missing some information. Based on my results I would build graphs and come up with conclusions. The most exciting part for me is that I did not find anyone doing the same research that I am doing which means that I will be the first one that can discover something different and new.
Data and Descriptive:
The intended population of this research belongs to petromin management or consumers of the Saudi Arabia. This includes both male and female participants. The purpose of my survey was to learn more about the relationship between the VAT implementation and increase in prices of petroleum products. The information obtained was not recorded in a manner that human subjects could be identified. A convenience sample was used, and the survey link was posted on different online sites, such as Facebook and Instagram.
Our sample includes 30 participants, 15 from the management and 15 from petromin consumers. However, we received data with 120 participants originally. By cleaning up the data (some questions were skipped, wrong information was entered, or participants left the survey before even evaluating any information).
Research Philosophy
With the literature analysis and the gathering of survey results, there will be enough data to conclude anything. However it is essential that the appropriate data must be gathered and analyzed so that there won’t be any chance of distraction or wrong results. That is why it is essential that only recently published literature should be analyzed. Moreover, it the selected literature is about the VAT implementation on the petromin products by Saudi Arabia and its impact on the economy of Saudi Arabia because in this way it will be easier to evaluate, how VAT implementation will impact the economic condition of Saudi Arabia. Also, different participants have filled the survey sheet but some of them had either not provided complete information or had provided false information. That is why the survey results were also filtered and only those results were included in the findings which were authentic and completely filled. In this way the research will provide the authentic information about the VAT percentage implementation on the petromin products, its impact on the petromin products, and its impact on the economy of the Saudi Arabia.
Theoretical Framework:
Saudi Arabia has been facing up and down in the oil prices. Now, since last few years, the prices of crude oil and petromin products have been reduced which is an alarming condition for the Saudi Arabia because its economy depends on the petromin products. However, Saudi Arabia and all GCC countries have now decided to implement value added tax on all petromin products. That is why the VAT implementation and its impact on Saudi Arabia’s economy is the major focus of researchers. Cetin et al. (2014) also presented his study in which he discussed how the VAT implementation of the products leaves an impact on the financial conditions of the countries. On the basis of their searching, this study will evaluate that how the VAT implementation leaves its impact on the financial conditions of Saudi Arabia . Luc (2015) also presented his study in which he discussed the effects of Increases in Value Added Tax. He showed that the VAT implementation can never be harmful or can no way leave negative impact on the low income households rather it leaves a very positive impact on the economy of the country. Now this study will also evaluate that how much VAT percentage will be applied on the petromin products by Saudi Arabia and how it will affect the economic condition of Saudi Arabia .
Chapter 4
Findings
The purpose of this study is to evaluate the impact of VAT implementation of the services and goods of GCC countries, where the focus is its impact on Saudi Arabia. In the last two years, oil prices have been facing great fallen due to which Saudi Arabia has been facing an alarming condition for the stability of its economy. Saudi Arabia and other GCC countries have now decided that the expenditures of the country should be controlled by the implementation of value added tax to the goods and services. The Saudi government has decided that 5% of the total cost paid by end consumer will be implemented as VAT to the services and goods.
In the present time, the average rate of petroleum product is $45-$50 per barrel. If Saudi Arabia applies 5% VAT, then the price details will be according to the table 1.
Table 1 Rates of Petroleum Products per Barrel after Implementation of VAT.
| Raw Material Producers | Manufacturer | Retailer | |
| Original Rate | $48 | $51.4 | $57 |
| Seller Tax rate | $2.4 | $2.57 | $2.85 |
| Total Rate | $50.4 | $53.97 | $59.85 |
| Consumer VAT tax rate | $2.4 | $0.17 | $0.28 |
The detail calculation of the petroleum rate per barrel has been shown in Table 1. The table shows that the rate of the barrel will increase from $48 to $59.85. In the table, there are three columns. The first column is showing the purchasing of Raw material by the petroleum industry then the second column shows the addition of manufacturing cost whereas the third column shows the purchasing of Retailer. It means when the raw material is purchased by the industry then they pay $48 per barrel but after paying VAT to the government and further addition of taxes raises the price per barrel to $60.
In the first column $48 shows the purchasing of the raw material, but then 5% VAT is applied on it which becomes $2.4 per barrel which raises its cost to $50.4 per barrel. It means that in this process $2.4 is paid to the government of Saudi Arabia. In the second step when manufacturing cost in included then the cost becomes $51.4 per barrel and 5% VAT of this price becomes $2.57 per barrel. The total cost becomes $53.97 per barrel. In this step, the tax paid to the government is (51.4-48) × 5%= $0.17 per barrel. Finally, the product is sold to the retailers at the price of $57 per barrel for which they pay a tax of $2.85 per barrel which raises the price of petroleum to the $59.85 per barrel. The retailers have to pay the tax (2.85-2.57) = $0.28 per barrel to the government. Finally, the finished product is sold at the rate of $60 to the consumer.
These details show that the total tax paid to the government is (2.4 + 0.17 + 0.28) = $2.75 per barrel. This shows that for every sale of $60 per barrel, the government earns $2.75 VAT per barrel, which may be used for the expenditures of the Saudi government and the development of the country. This increase in price is expected in 2018, and it is expected that with the passage of time the price will increase which will be a challenging condition for the retailers and the consumers. It is expected that the price will increase day by day. According to the survey results from the Petromin management of “Petromin Express,” the expected increase in the rates of petroleum products are shown in the graph below;
This means that the price of the petroleum will continuously increase and will reach to $84 per barrel in 2030. This shows that in actual, with the VAT implementation the prices of the petroleum products will regain their previous rates. If we compare the expected increase in the petroleum rate with the previous changing in the rates of petroleum products from 1970 then the results are shown in the graph below;
Figure 4 Prices of Petroleum products from 1970 to 2030.
The graph is clearly indicating that the prices increased from $1 per barrel and reached to $84 in 2010 and then the rates decreased and became $50 in 2015 but now with the implementation of VAT on the petroleum products it is expected that the oil rates will regain their rate of $84 per barrel till 2030. This will be highly beneficial for the Saudi government because in this way they will be able to use the received tax income for the development and expenditure of the country.
The study failed to get any information regarding Saudi’s plan B to deal with the increasing prices of the petroleum products. However Saudi government and other GCC countries have decided to implement just 5% VAT on the petroleum services with which there will be no excess increase on the petromin products. However according to the GCC framework of value added tax implementation there are some limits of VAT are described in the figure below.
According to the limitations of VAT, the VAT implementation must not cause the excess increase in the price of petromin products. In the figure 5, there are three curves, blue curves are showing the values of Supply and Supply + Tax, whereas the brown curve is for the demand. According to this figure, there must be a balance between the tax implementation. It means that the rate of the supply must increase with a normal margin after the implementation of tax and thus in this way the rates of the products will not increase rapidly. Moreover, the tax and supply of the petromin products must rely on the demand and both, demand and the supply + tax, must remain in the balance position because it will manage the petromin revenue of the Saudi government. Otherwise, if the tax will increase rapidly then it will reduce the revenue of the petromin products and then VAT will become insufficient for the Saudi government.
The reason for the limitations is that if the prices of the goods will increase then the market purchase will decrease and thus the quality of traded goods or the petromin products will also be affected. When the prices are high then the consumers become unable to purchase good quality products and thus the companies which provide low quality products can get benefits.
According to the figure 5, when the VAT is implemented then the tax rate affects the price of product and thus the price goes on increase. The only solution for this problem is to manage VAT in a way that the prices must not excess the limit. Also according to the deadweight loss, if the prices of the products will become extra higher then this will affect the income of the economy and thus the tax money will become in sufficient for the government.
Chapter 5
Conclusion
Before 2000, the oil rates were high in the international market due to which GCC countries have been enjoying great development in almost all departments. Also, a rapid growth has been observed in different activities of these countries, such as the subsidized provision of water and electricity, low taxation, and soft loans (Fasano and Wang 1-195). For a long time, Saudi Arabia and other oil producing countries have been enjoying the great profit from oil revenues and thus have been enjoying the stable and strong economy of the country. In fact, till 2014, the oil barrel was sold at $115. But now these countries are facing great collapse in the oil prices. In 2016, the oil rate reduced to $45 to $50 per barrel which also left a deep impact on Saudi economy (Freeman 1-7).
Saudi Arabia has been facing different shocks of oil prices which have affected the economy of the Saudi Arabia. In the first shock of oil price, Saudi GDP was highly increased due to which Saudi Arabia established its economy and became one of the World’s fastest growing economies (Ghamdi). Whereas, the fifth shock of the oil price left a very negative impact on Saudi’s GDP. In the start when oil prices faced fallen then the Saudi’s government manage they’re budgetary by either cutting their expenditures or by increasing the non-oil revenues. But this is not the permanent solution of the problem that is why the government thought to establish tax system with which Saudi will be able to manage their budgetary in the case of fall in oil prices (Abdelbasset 5-12).
Now Saudi government has now decided to adopt value-added tax system which will be implemented in 2018. Value added tax (VAT) is an indirect tax on the consumption of services and goods which are paid by the end consumer. Saudi Government has decided to apply VAT on petroleum products, food items, export items, essential medicines, and international services. However, other services and supplies, such as education sales, healthcare items, insurance, and lease of residential property will be exempted from the value added tax (VAT) (Dale).
The Saudi government and other GCC countries have implemented VAT to generate the additional revenue. This revenue will help the government to rebuild its economy. According to the adopted GCC VAT framework, Saudi will implement the standard value added tax rate which will be 5%. However few products and services will be exempted from the VAT, which will be health, education, local transport, and real estate. It means that VAT will not be applicable on all goods and services rather education, real estate, local transport, and health departments will face zero VAT.
Due to the opposition of public and the political parties, VAT has been postponed so many times, but now the government has announced its practical implementation on goods and services from 1 January 2018. It is also concluded by the philosophers and analysts that VAT could be proven as an unwelcome shock to the Saudi Arabia because this system is not the best solution for this government. Due to the VAT, plenty of risks and complications will be faced by companies, industries, and businesses in Saudi Arabia. VAT implementation is not a process of one day or one week rather it is a slow process which will impact the costs, cash flow, and sales of the businesses. Another challenge for the Saudi government is that people are unaware of the financial information of VAT which may also be highly risky for the business sector of Saudi Arabia. It is essential that awareness sessions must be given to the companies to have a better understanding with the series of VAT (Dudley).
This study is about the VAT implementation of the services and goods of GCC countries, where the focus is its impact on Saudi Arabia. But VAT implementation will also increase the supplied value of the petroleum products. To calculate the estimated increase in petromin products, I made a survey with the promin management and consumers of “Petromin Express.” The sample consisted of 30 participants. According to the results of the survey, it is expected that the price of petromin products will increase from $45 and will reach to $60 in 2018 and will reach to $85 till 2030.
The study could not answer the second question however the Saudi government has decided to just implement 5% VAT on the petromin products due to which the prices will not increase to higher rates. Thus there will be no issues of the high rates of petromin products. From this study, it can easily be concluded that VAT implementation on the products will, no doubt, increase the rates of petromin products but with the implementation of 5% VAT, the prices of petromin products will be under control. In this way, the government will also be able to use the VAT amount for the developing of the country and to stabilize its economy.
References
Abdelbasset, Mohamed. “Tax Poolicy Reform In Saudi Arabia.” International Journal of Business and Managemen (2004).
Ainsworth, Richard Thompson and Musaad Alwohaibi. “GCC VAT: The Intra-Gulf Trade Problem.” Law and Economics Research (2016).
Algahtani, Goblan J. “The Effect of Oil Price Shocks on Economic Activity in Saudi Arabia:.” International Journal of Business and Managemen 11.8 (2016): 124-135.
Alshahrani, Dr. Saad. “Value Added Tax: Its Implementation and Implications.” 2016.
Avalara. “Saudi Arabia 2018 VAT bill.” 29th May 2017.
Cetin, Bora & Hofstetter, Joerg S. “The Financial Impact of Value Added Tax (VAT) on Supply Chains.” Academy of International Business (2014).
Chemingui, Mohamed Abdelbasset, and Hans Lofgren. “”Tax policy reform in Saudi Arabia: A general equilibrium analysis.” .” proceeding of the Economic Research Forum’s 11th annual conference, 2004.
Daniel Mitchell. “Beware the Value-Added Tax.” 2005.
Daou, Jeanine. “An introduction to Value Added Tax in the GCC.” 2017.
—. “An introduction to VAT in GCC Countries.” PWC (2017).
Deloitte. “The introduction of VAT in Saudi Arabia.” February 2017.
Dudley, Dominic. “Gulf Countries Wake Up To The Looming Challenge Of New Sales Tax.” Forbes (2017).
Erero, Jean Luc. “Effects of Increases in Value Added Tax.” Economic Research Southern Africa (2015).
EY. “Preparation for GCC VAT by 1 January 2018 requires immediate action.” March 2017.
Fahey, Mark. “Oil prices and budgets:The OPEC countries most at risk.” CNBC (2015): 5-8.
Fasano, U. and Q. Wang. “Fiscal Expenditure Policy and Non-Oil Econmic Growth.” IMF Middle East Departments (2001): 1-195.
Fraihat, Ibrahim. “The Impact of Low Oil Prices and Taxation on the GCC Countries.” 2016.
France-Presse, Agence. “Saudi Arabia signals end of tax-free living as oil revenues slump.” The Guardians (2017).
Freeman, W. Saudi Arabia and the Oil Price Collapse. 2016. 19 June 2017 <http://www.mepc.org/speeches/saudi-arabia-and-oil-price-collapse>.
Gazette, Official. “Saudi Arabia publishes GCC VAT Framework Agreement in the Official Gazette.” EY Better Working World (2017).
Ghamdi, A. “Revenue Fluctuations and Current and Development Expenditures in GCC Countries.” Development Policy Review (1991).
Giesecke, James A. and Tran Hoang Nhi. “Modelling value-added tax in the presence of multi-production and differentiated exemptions.” Journal of Asian Economics 21.2 (2010): 156-173.
Insights, EY Tax. “Saudi Arabia officially announces adoption of GCC VAT.” 2017.
Karen, Rimo. “”Jury Is Still Out On VAT’s Viability in U.A.E'”.” 2010.
Keen, Michael and Ben Lockwood. “. “The value added tax: Its causes and consequences”.” Journal of Development Economics 92.2 (2010): 138-151.
Kemp, Kim. “Qatar and GCC face VAT implementation challenges.” Construction Week Online (2017).
KPMG. “Value Added Tax is on the Horizon.” 2016.
Kuruvilla, Anil. “VAT coming to the Saudi Arabia?” Tax & Accounting Blog (2016).
Maceda, Cleofe. How VAT will impact businesses in UAE. News. Dubai: GULF NEWS, February 28, 2016.
Marić, Denis. “The Impact of the 2018 Value Added Tax (VAT) on the Food and Drinks Industry in UAE and Saudi Arabia.” Dec 8, 2016.
MARTIN HARRISON. “TAXATION AND THE GCC STATES.” 2010.
McMahon, Tim. “Are Low Crude Oil Prices a “Boom Or A Curse” For The World Economy?” Financial Trend Forecaster (2015).
NEWS, ARAB. No income tax, but VAT starts in 2018. RIYADH: Arab News, 5 May 2016.
Onji, Kazuki. “The response of firms to eligibility thresholds: Evidence from the Japanese value-added tax.” Journal of Public Economics 93.5 (2009): 766-775.
RT News. “End of tax-free living in Saudi Arabia as oil revenues dry up.” 31 Jan, 2017.
Saudi Gazette. KSA issues public consultation on draft VAT. Riyadh: Saudi Gazette, June 5, 2017.
Tanzi, Vito. “”The Value Added Tax in the Context of the Proposed GCC Common Market.” .” Ehtisham Ahmad, Abdulrazaq Al Faris. Fiscal Reforms in the Middle East: VAT in the Gulf Cooperation Council. 2010. 197-283.
Young, Ernst &. “Saudi Arabia publishes GCC VAT Framework Agreement in the Official Gazette.” 2017.
