RIYADH: Tax-free living will soon be a thing of the past for Saudis after cabinet on Monday approved an IMFbacked value-added tax to be imposed across the Gulf following an oil slump.

Residents of the energy-rich region had long enjoyed a tax-free and heavily subsidised existence but the collapse in crude prices since 2014 sparked cutbacks and a search for new revenue. Saudi Arabia is the world`s biggest oil exporter and the largest economy in the Arab region.

It 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 sixmember Gulf Cooperation Council, the official Saudi Press Agency said. `A Royal Decree has been prepared,` it said.

A five-percent levy will apply to certain goods following a GCC agreement last June.

The move is in line with an International Monetary Fund recommendation for Gulf states to impose revenue-raising measures including excise and value-added taxes to help their adjustment to lower crude prices which have slowed regional growth.-AFP