In Saudi Arabia there is very simple Value Added Tax system. It has just one VAT rate and it is very low – only 5%.
Value Added Tax also is very new tax in Saudi Arabia. It was introduced only from 1st of January, 2018
History of VAT in Saudi Arabia
In June 2016, the GCC ( Gulf Cooperation Council ) countries – Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman – agreed to impose VAT across the GCC region. In February 2017 Saudi Arabia ratified the GCC VAT framework and on 1st of January 2018 VAT was introduced at a standard rate of 5%.
Why VAT was introduced in Saudi Arabia
Because of unstable prices of crude oil (crude oil price dropped from ~$100 in 2014 to ~$60 in 2019) the GCC countries are looking for other sources of income, such as tourism and other business-related revenue streams. The VAT introduction is one of these measures.
From 27th of September 2019 Saudi Arabia opened it borders for tourism and Saudi Arabian government expects tourism will contribute up to 10% of the gross domestic product by 2030, compared with 3% currently. It says by 2030 it aims to attract up to 100m annual visits by both domestic and foreign tourists.
Here is an official Saudi Arabia VAT website for https://www.vat.gov.sa/en. Check it for more detailed information about Value Added Tax system in Saudi Arabia.