On May 15, 2019 the International Monetary Fund has issued a concluding statement regarding Saudi Arabia economic development for the year 2018 where it makes comments on the present and future of VAT.(1)
The economic reforms implemented by the government have yield positive results and the successful introduction of VAT has contribute to an increase in non-oil fiscal revenues. Nevertheless, it has also pushed inflation making overall price levels go up having an impact on energy prices as well.
Looking into the coming years, the IMF recommends to raise the VAT rate from 5%, which is low by global standards, to keep on increasing non-oil income. Keeping that in mind, the IMF also recognizes the negative effects of such measure, having a direct impact on CPI inflation, therefore, in order to protect the less well-off social assistance programs need to continue to ensure they provide adequate financial support to those who need it.