Retailers in Saudi Arabia saw a sudden surge in sales as shoppers decided to stock up before an additional 15% Value Added Tax was imposed on items across the board. The citizens are bracing for a surge in prices as the government has tripled the VAT to overcome the losses due to the COVID-19 and the oil price slump. This is also likely to shoot up inflation and affect household incomes.
The shopping spree was fuelled by belief that electronic items and such would be out of reach of many once VAT came into being. The country has practically no taxes and introduced VAT only in 2018 to lower its dependence on income from oil.
It has also halted the cost-of-living monthly allowance that was being given to its citizens. Agency reports said there was a substantial jump in sale of gold and cars but businesses are bracing for an overall drop in sales once the new VAT rates come into force. The country has also limited the number of pilgrims allowed to carry out the hajj pilgrimage which will also resulted in loss of revenue. The pilgrimage earned the country $12 billion annually.