Taxes or tariffs on imports in Saudi Arabia Essay

Taxes or tariffs on imports in Saudi Arabia - Essay Example However, Saudi Arabia imposes 5 percent duty of customs upon majority of imports that are dutiable. Although 5 percent customs duty is charged on majority of dutiable goods, certain imports attract a higher duty of 12 percent ad valorem on cost, insurance and freight value commonly known as C.I.F while other imported commodities are charged 20 percent customs duty so as to protect the national infant industries. Commodities covered by customs duties of 20 percent include; Bottles and flasks, Ice cream without cocoa, Chocolates, Chewing gum, Aluminium barrels and cans among others. This is among the government’s undertakings to ensure growth of industries in this nation of Saudi Arabia. (www.the-saudi.net) Contractors in Saudi Arabia are required to purchase materials and equipments locally but if the materials are not available then they can import from foreign countries at zero to 4 percent tariff rates. Tobacco is charged the highest rate duty of 1 percent. This high duty is meant for discouraging its smoking and other ways of consumption in the nation since it is harmful to humans. It is therefore evident that the government of Saudi Arabia has, to a great extent, used tariffs and taxes on imports as a control measure in the country. In addition to the above taxes, 5 percent common external tariff which was established by the gulf cooperation council (GCC) forms part of tariffs charged in Saudi Arabia. GCC is formed by six states in membership which are Bahrain, Saudi Arabia, Kuwait, United Arab Emirates, Oman and Qatar. All imports coming from GCC’s states are usually exempt from any duties. Originality of these goods requires that 40 percent of value be added internally. In addition, special concessions are given to members of the Arab league since they are happen to be signatories to the agreement that is meant to facilitate trade as well as exchange and also to organize transit of commodities between the Arab league states. Further duty red uctions are given on commodity imports from the Arab states which have entered bilateral agreements with this nation of Saudi Arabia. It is worth noting that only a few items have their customs duties calculated based on metric weight and capacity as opposed to ad valorem. However, the rates for such limited commodities are relatively low. (www.cgijeddah.com) SYSTEM USED The Harmonized Commodity Description and Coding System (HS) of the international Brussels agreement of 14 June 1983 have been in use in Saudi Arabia since 1991. This system came into being after authorization by the Royal Decree Number M/56 and that is dated 19/10/1407 H., and it was ordered to be put into function by the Minister for Finance and national Economy in Order No. 3/1805 dated 19/10/1410 H. This is the main system used by the customs department of Saudi Arabia In determining the rates of taxes applicable to different imported commodities. It gives provisions of classification for entirely every commodity that has a possibly of being imported. (www.the-saudi.net) SAUDI ARABIA’S ECONOMY. Saudi Arabia, being an oil rich kingdom has one of the most vibrant economies in the Gulf region. Buoyed by clear focus on economic diversification and record oil prices, the kingdom of Saudi represents exciting