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Saudi Shura Council Endorses Selective Tax Scheme | ASHARQ AL-AWSAT English Archive 2005 -2017
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Saudi women and men, members of the Saudi Shura Council, attend a session chaired by Saudi Arabia’s King Salman, in Riyadh December 23, 2015. REUTERS/Faisal Al Nasser

Riyadh – The Saudi Shura Council has endorsed the draft Selective Tax Scheme (STS) which will be submitted to the Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud in compliance with Shura Council regulations.

In the past week, the council heard the report of the Financial Committee on the STS.

Chaired by Shura Council Speaker Sheikh Abdullah bin Mohammed Al Al-Sheikh, the panel approved the plan in its regular 30th session taking into consideration that the GCC unified agreement becomes effective before issuing the scheme.

The proposed tax regulation stems from the unified agreement on selective tax, which was signed by GCC member states on October 10, 2016 — Under paragraph 2 of Article 29 of the GCC agreement, each country shall promulgate a local law that sets the rules for implementing the agreement and drawing up the policies and procedures.

The STS system aims at reducing consumption of goods which are deemed harmful to human health, especially among the youths, and limiting the spread of diseases among consumers of these goods including tobacco, energy and carbonated drinks – STS also has economic goals embodied in directing the community towards purchasing beneficial goods and allocating the taxes earned for development projects and beneficial programs.

Saudi Economic analyst Fadel al-Buainain told Asharq Al-Awsat that “the selective tax is imposed on tobacco, energy and carbonated drinks – goods that harm the health and influence the environment.”

Buainain added that one of the reasons behind imposing the selective tax is limiting consumption of expensive goods, he affirmed that the government might adjust the tax based on what it deems best, through increasing or reducing its value.