Saudi Arabia and the United Arab Emirates have introduced Value Added Tax (VAT) for the first time. <br/><br/>The 5 per cent levy is being applied to the majority of goods and services. Petrol and diesel, food, clothes, utility bills and hotel rooms all now have VAT applied. <br/><br/>But some outgoings have been made exempt from the tax or given a zero-tax rating, including medical treatment, financial services and public transport. Gulf states have long attracted foreign workers with the promise of tax-free living. <br/><br/>But governments want to increase revenue in the face of lower oil prices. The tax kicked in today in both countries.<br/><br/>Organisations such as the International Monetary Fund have long called for Gulf countries to diversify their sources of income away from oil reserves. <br/><br/>In Saudi Arabia, more than 90 per cent of budget revenues come from the oil industry while in the UAE it is roughly 80 per cent. <br/><br/>Both countries have already taken steps to boost government coffers.<br/>''''