Saudi boosts citizen benefits as taxes bite

Riyadh: Saudi Arabia announced on Saturday it had boosted stipends and benefits for citizens to cushion the impact of economic reforms including the kingdom's first ever taxes after an oil price slump.

Most working Saudi Arabians are employed by the state and, like nationals in other energy-flush Gulf monarchies, have long benefited from a generous welfare system.

After the 2014 oil market crash, Saudi Arabia as well as the neighbouring United Arab Emirates announced a five percent value-added tax on most goods and services which took effect at the start of this year.

In a move that aims to "soften the impact of economic reforms on Saudi households," King Salman issued a royal decree late Friday ordering a 1,000 riyal ( 267, 222 euros) living allowance for military personnel and public servants.

Student stipends will be increased by 10 percent, an official statement said.

The oil-rich Gulf has long been a tax-free haven for both high-income households and migrant labourers, who frequently rely on remittances to support their families back home.