Saudi Ara­bia cuts tax rates on oil firms to woo in­vestors

New Straits Times - - Business World -

RIYADH: Saudi Ara­bia yes­ter­day cut taxes on oil com­pa­nies in a ma­jor move that could at­tract in­vest­ments in its en­ergy gi­ant Saudi Aramco, ex­pected to be of­fered to in­vestors next year.

King Sal­man de­creed a new set of in­come tax rates on oil com­pa­nies work­ing in the king­dom, rang­ing from 50 to 85 per cent depend­ing on the firms’ in­vest­ments, af­ter it was 85 per cent across the board.

The royal de­cree pub­lished yes­ter­day said com­pa­nies in­vest­ing more that 375 bil­lion riyals (RM441 bil­lion) will be sub­ject to a 50 per cent tax rate.

“Aramco’s tax rate is re­duced from 85 per cent to 50 per cent, bring­ing it in line with in­ter­na­tional bench­marks,” the govern­ment-owned oil gi­ant said on its Twit­ter fol­low­ing the de­cree.

Saudi Ara­bia plans to sell five per cent of Aramco next year, as part of ef­forts to build up a large sov­er­eign wealth fund. The sale falls within the king­dom’s strat­egy to di­ver­sify its oil-de­pen­dent econ­omy away from hy­dro­car­bons.

“The royal de­cree con­cern­ing taxes is in the in­ter­est of the king­dom, its cit­i­zens and fu­ture gen­er­a­tions,” said En­ergy Min­is­ter Khalid al-Falih.

Aramco chief Amin Nasser said the royal or­der “is pos­i­tive for the king­dom's eco­nomic di­ver­si­fi­ca­tion”, and in line with the “Vi­sion 2030” for eco­nomic re­forms led by the king’s son, Deputy Crown Prince Mo­hammed Sal­man.

The king­dom has in­ten­si­fied eco­nomic re­form ef­forts af­ter oil prices plunged last year be­low US$40 per bar­rel from above US$100 in 2014. AFP

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