Consumers welcome decision by various companies to bear VAT burden
KSA tripled value added tax from 5% to 15% as part of new measures to mitigate economic repercussions of pandemic
Saudi companies are promoting discounts on products in a bid to reduce financial pressure on customers following Saudi Arabia’s decision to triple the value added tax (VAT) from 5 to 15 percent, starting July 1.
The Kingdom announced the move on May 11 as part of new measures to mitigate the economic repercussions of the COVID-19 pandemic.
LuLu Group, the leading hypermarket chain in the Kingdom, told Arab News: “This week we have the campaign ‘VAT on us, savings on you.’ We are bearing the 15 percent VAT for the customers.”
The chain also issued a booklet with a list of products on discount. “We are giving discounts on all products mentioned in the booklet to compensate customers,” the company said.
Ahmad AR, CEO of Danube and BinDawood, said his stores would also maintain competitive prices for consumers.
“From a grocery retail perspective, shopping will continue to remain a priority for all individuals and families. It is too early to offer a firm view or discuss the impact of purchasing habits of consumers,” he said.
“When it comes to discounts, our pricing strategy is always to maintain the most competitive prices at Danube. Customers trust our brand because the overall shopping experience we offer is unique across all verticals, including product offering,” he added. Shoppers in the Kingdom have welcomed the campaign.
Manal Mukhtar, an English teacher at a private school in
Riyadh, told Arab News: “We are already experiencing price increases without taking the VAT into consideration. Now we have this to worry about as well. I am grateful to all the companies that have offered to shoulder the additional costs while we get our bearings, but I hope the cost of living allowance will return now that lockdown is over. If the VAT is going to affect us that much, we are probably going to need it.” Saudi Arabia suspended the cost of living allowance last month. Khalid Sultan, a university student in Riyadh, said: “While we can’t deny that it’s generous of the companies that have offered to shoulder the additional cost of the VAT themselves, it raises the question of how long it will last.” He added: “If it’s only a month or so, all they’re doing is prolonging the inevitable. It’s an appreciated gesture, but it only presents a short-term solution.”
Aljohara Alsubaie, an executive secretary, also welcomed the move, “especially since the news broke that we would no longer be receiving a higher cost of living allowance with our salaries.”
She hopes that larger companies will also follow suit, “especially those that can obviously afford it.”