The world’s largest oil exporter faces an economic contraction this year as the coronavirus crisis hits global demand for crude while virus containment measures weigh on non-oil economic sectors.
Still, despite a 30% yearly drop in oil revenues in the third quarter to 92.582 billion riyals, total revenues increased by 4% year-on-year to 215.577 billion riyals, partly thanks to tax increases.
Riyadh tripled a value-added tax to 15% in July to boost non-oil income, a move several economists said could weaken domestic demand and slow economic recovery.
“The increase in non-oil revenue was supported by the increase in VAT, which also benefited from pent-up consumer demand after the lockdowns as people could not travel outside of Saudi,” said Mazen al-Sudairi, head of research at Al Rajhi Capital.
Revenue from taxes was significantly higher in the three months to the end of September, according to the quarterly budget performance report published by the ministry of finance. Overall non-oil revenues jumped by 63% year-on-year.