Saudi Arabia to exempt medicines and medical equipment from VAT

The 5 per cent value added tax is due to come into force on January 1 2018

Saudi Arabia will exempt certain medicines and types of medical equipment from the 5 per cent value-added tax (VAT) it plans to impose in January, according to a statement carried by state news agency SPA on Saturday.

All other private health care services will be taxed at the standard rate, the statement said, citing directives issued by the General Authority of Zakat and Tax, the Ministry of Health and the General Authority for Food and Drug Affairs.

Saudi Arabia is imposing the VAT in coordination with other governments in the Gulf Cooperation Council as they seek new sources of revenue in a bid to close budget deficits caused by low oil prices.