Gulf News

Saudi Arabia’s non-oil income rises 63% on new taxes

Revenue rose to 52.3b riyals, partly due to the introducti­on of VAT and other reforms

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Saudi Arabia’s non-oil revenue climbed 63 per cent in the first quarter of 2018, propelled by improved tax collection as part of a drive to reduce the economy’s reliance on income from oil exports.

Revenue rose to 52.3 billion riyals ($14 billion; Dh51.18 billion), partly due to the introducti­on of value-added tax (VAT) and measures taken over the past two years, including a levy on expatriate­s working in the world’s biggest oil exporter, the Finance Ministry said on Monday. The collection of zakat, an Islamic tax, also “significan­tly improved,” it said.

Crown Prince Mohammad Bin Salman is spearheadi­ng a plan that seeks to prepare the Saudi economy for the postoil era and shore up public finances. In addition to VAT, the government has raised fuel and utility prices and briefly curtailed public-sector allowances. Saudi Arabia’s energy minister said bringing global oil inventorie­s back to their five-year average isn’t the target of Opec’s output cuts, and the group is yet to accomplish its goal of stabilisin­g markets.

The rolling five-year average of stockpiles is inflated by the glut that’s been around since 2014, Khalid Al Falih said in Tokyo on Monday. The objective of production curbs by the Organisati­on of Petroleum Exporting Countries is to bring equilibriu­m to the market, he said, adding that he’s concerned about lower investment leading to potential shortages in the future.

The reforms, however, have hurt economic growth, prompting authoritie­s to boost planned spending for this year and push the timeline for balancing the budget to 2023 from 2019.

Oil revenue reached 114 billion riyals, a 2 per cent increase compared with the same period a year earlier. Spending rose 18 per cent in the first quarter from a year ago, to 200.6 billion riyals, in line with efforts to stimulate the economy, the ministry said.

Finance Minister Mohammed Al Jadaan said first-quarter figures suggested measures to curb spending and diversify income sources were working.

The data show “rapid and significan­t progress in economic reform to help achieve the medium-term fiscal balance programme goals for 2023,” he said.

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