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June 4, 2026SustainabilityOpen Access

VAT Reform, Digitalization, and Sustainable Consumption in Saudi Arabia

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Authors

YAYosef AlamriAKAlaa KotbJAJawad Alhashim

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Overview

Randomized trial examines POS spending changes in Saudi Arabia's food sector due to VAT reforms, suggesting important implications for tax policy.

Key Points

  • This paper investigates the effects of VAT reforms on spending behaviors in the food service sector amid digital payment advancements in Saudi Arabia.
  • Analyzed monthly official POS data from January 2016 to January 2024.
  • Applied an interrupted time-series framework with Generalized Least Squares and robustness checks using Error Correction Model and SARIMAX.
  • Controlled for factors including food prices, headline inflation, and COVID-19 disruptions.
  • Recorded POS sales showed statistically significant increases post-VAT reforms, with larger effects observed following the 2020 increase.
  • Changes primarily reflect transaction formalization and improved reporting compliance rather than sustained demand growth.
  • ECM estimates indicated that approximately 56% of short-run disequilibrium was corrected within one month.

Cite This Study

Alamri et al. (2026) studied this question.

synapsesocial.com/papers/6a211611d499ed480b16f26chttps://doi.org/10.3390/su18115514
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