Now even Saudi Sheikhs will be paying tax, here’s why

When it comes to tax free living, the whole world is envy of people in Gulf but now tax-free living will soon be a thing in the past for Saudis as the cabinet approved an IMF-backed value-added tax to be imposed across the Gulf following an oil slump.

The price of crude has dropped down drastically since 2014 and this has further led cutbacks and a search for new revenue.

Saudi Arabia is the world's biggest oil exporter and the largest economy in the Arab region and this dropdown in prices has froze major building projects, cut cabinet ministers' salaries and imposed a wage freeze on civil servants to cope with last year's record budget deficit of $97 billion. It also made unprecedented cuts to fuel and utilities subsidies.

The kingdom is broadening its investment base and boosting other non-oil income as part of economic diversification efforts and aims to balance its budget by 2020. Cabinet "decided to approve the Unified Agreement for Value Added Tax" to be implemented throughout the six-member Gulf Cooperation Council, the official Saudi Press Agency said.

"A Royal Decree has been prepared," it said.

The GCC countries have already agreed to implement selective taxes on tobacco, and soft and energy drinks this year.