In a first for Saudi Arabia, petrol will be taxed starting January.
Drivers in the kingdom will be required to pay an extra 5 percent value added tax (VAT) each time they fill up their vehicle's tank, as a new taxation scheme comes into effect next year.
It was at first unclear whether the taxes would be applied to petrol, which has historically been subsidized by the government. However, responding to an online question, Saudi Arabia's General Authority of Zakat and Tax confirmed the news.
"The VAT rate of five per cent for petrol will be applied starting January 1, 2018," the authority said, according to Gulf News.
"Petrol prices will include VAT of 5 percent as of Jan.1."
The tax comes as part of a scheme agreed upon by Gulf Cooperation Council nations. As oil prices have dropped globally, oil-reliant Gulf nations have moved to diversify their economies, institute austerity measures and implement taxes.
Economic reforms have been the most drastic in Saudi Arabia, where Crown Prince Mohammed bin Salman has led the charge with his ambitious Vision 2030 plan.
Already last year, the kingdom began cutting subsidies on fuel, causing a significant price increase on consumers.
Some are also concerned that businesses in the kingdom are not ready to deal with the new tax scheme taking effect in less than two months.
"Businesses have a lot to do to prepare for VAT, and GAZT is doing everything in its power to help businesses and raise their readiness," Governor of GAZT Suhail Abanmi said, according to Arabian Business.
Although many may be unhappy to pay more at the pump, the kingdom's leadership sees the new taxes as vital to avoid serious financial woes.
Last year, the kingdom's economy was predicted to be heading for a recession. But due to major reforms, it still remains to be seen if that prediction will come true.