Saudi supermarket VAT Riyadh
Saudis shop at a supermarket at the Panorama Mall in the capital Riyadh on May 22, 2020. Saudi Arabia's General Authority for Zakat and Tax (GAZT) has started a campaign for shops in the retail sector to ensure their commitment to the VAT system. Image Credit: AFP

Dubai: Saudi Arabia's General Authority for Zakat and Tax (GAZT) has implemented an extensive inspection campaign for shops in the retail sector, the Saudi Press Agency reported.

The campaign aims to ensure the commitment of shop owners to the value-added tax (VAT) system and the implementation of its regulations.

In cooperation with the Ministry of Commerce, GAZT has implemented 1,335 inspection visits, with the participation of all the authorities’ branches in different regions since the announcement of increasing VAT to 15 per cent from 5 per cent on May 11.

The number of shops penalised for tax violations has reached 421, and violations varied from not keeping records, documents and tax invoices to failing to collect VAT.

Earlier this month, Saudi Arabia announced a slew of key fiscal measures to bolster the economy which is facing an unprecedented challenge in the face of global coronavirus pandemic.

An increase in the value-added tax rate (VAT) and suspension of cost-of-living allowances were among the important measures that have been announced by Minister of Finance Mohammed Al Jadaan.

The hike in VAT from 5 per cent to 15 per cent will be effective from the beginning of July and a halt to the social allowance will begin from June this year.

The government has also taken some measures to reduce the expenditure amounting to SR100 billion which includes a number of Vision Realization Programmes and major projects for the fiscal year 2020.