• 20 mins London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 1 hour Rosneft Signs $400M Deal With Kurdistan
  • 4 hours Kinder Morgan Warns About Trans Mountain Delays
  • 10 hours India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 15 hours Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 19 hours Russia, Saudis Team Up To Boost Fracking Tech
  • 1 day Conflicting News Spurs Doubt On Aramco IPO
  • 1 day Exxon Starts Production At New Refinery In Texas
  • 1 day Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 2 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 2 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 2 days China To Take 5% Of Rosneft’s Output In New Deal
  • 2 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 2 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 2 days VW Fails To Secure Critical Commodity For EVs
  • 2 days Enbridge Pipeline Expansion Finally Approved
  • 2 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 2 days OPEC Oil Deal Compliance Falls To 86%
  • 3 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 3 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 3 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 3 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 3 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 3 days Aramco Says No Plans To Shelve IPO
  • 6 days Trump Passes Iran Nuclear Deal Back to Congress
  • 6 days Texas Shutters More Coal-Fired Plants
  • 6 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 6 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 6 days Chevron Quits Australian Deepwater Oil Exploration
  • 6 days Europe Braces For End Of Iran Nuclear Deal
  • 7 days Renewable Energy Startup Powering Native American Protest Camp
  • 7 days Husky Energy Set To Restart Pipeline
  • 7 days Russia, Morocco Sign String Of Energy And Military Deals
  • 7 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 7 days China Set To Continue Crude Oil Buying Spree, IEA Says
  • 7 days India Needs Help To Boost Oil Production
  • 7 days Shell Buys One Of Europe’s Largest EV Charging Networks
  • 7 days Oil Throwback: BP Is Bringing Back The Amoco Brand
  • 7 days Libyan Oil Output Covers 25% Of 2017 Budget Needs
  • 7 days District Judge Rules Dakota Access Can Continue Operating
Alt Text

The New Challenger To Lithium Batteries

The lithium-ion battery is head…

Alt Text

5 Players To Watch In The FinTech Revolution

Artificial Intelligence and Blockchain tech…

Alt Text

India’s Urban Explosion Boosts Oil Demand

As India sees incredible growth…

Saudi Arabia To Tax Foreign Residence As Oil Crisis Continues

Saudi Arabia

The troubles that Saudi Arabia has been facing due to the plunge in oil prices have been discussed many times, most recently when Saudi authorities ordered banks to stop allowing speculators to bet against the Riyal. Liquidity worries have also surfaced, as late last month Saudi Arabia indicated that it was considering paying contractors with government issued bonds - read: IOUs.

GDP growth has slowed significantly...

(Click to enlarge)

While debt to GDP has soared relative to prior years

And Riyal forwards have plunged as bets on devaluation soar (despite government bans)

(Click to enlarge)

Against that backdrop, although oil has rebounded from recent lows, budgets are still light and in an attempt to help raise revenues in the short term (and transition away from dependency on oil in the longer term), the government is weighing an income tax on expat workers. As Bloomberg reports, in a proposal released this week for the country's National Transformation Plan, the kingdom is seeking to tax millions of foreign residents.

The tax is only "an initiative that will be discussed" Finance Minister Ibrahim al-Assaf said. However as Bloomberg notes, the fact that the tax was included in the proposal means that Deputy Crown Prince Mohammed bin Salman is considering the idea. Prince Mohammed has already taken steps to reduce spending, recently cutting fuel and utility subsidies and has proposed reducing the public sector wage bill. The kingdom is also joining other members of the six-nation Gulf Cooperation Council in imposing value-added taxation starting from 2018.

"Deepening the taxation base will be an important step in increasing non-oil revenue, which will likely start with a VAT first, but the discussion of income tax is notable. Introducing the tax could support efforts to create more jobs for nationals, but if it's not done in coordination with the other GCC countries then it will also reduce the competitiveness of Saudi Arabia to attract labor." said chief economist at Abu Dhabi Commercial Bank Monica Malik.

There are nine million foreigners living and working in Saudi Arabia said Mufrej Al-Haqbani, the country's labor minister, and Finance Minister Assaf said that there are no plans to tax Saudi nationals. Related: Shell Unveils New Strategy: ‘Leaner and Deeper’

There are varying opinions on whether or not the income tax would be a good idea. Mohammed Alsuwayed, head of capital and money markets at Adeem Capital said "I don't believe it's wise to introduce such a thing at a time when the kingdom is trying hard to attract direct foreign investments and not having income taxes was one of the most attractive prospects here." HSBC Holdings chief economist Simon Williams counters, saying "a 10 percent tax take would be very low by global standards, and wouldn't in itself drive expatriates away given the much greater tax burden they face elsewhere."

Whatever the outcome, it is clear that as Saudi Arabia continues to keep oil production at current levels, hoping to continue to force higher cost producers out of business, something will need to be done in the short term in order to solve the debt levels being used to fund the budget.

By Zerohedge

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • Kindred on June 10 2016 said:
    I have read an article from one of the local news agencies there.
    Saudi Arabia’s authorities announced there are no plans to charge
    citizens income tax, and said also no plans for placing tax on
    expat workers, as part of its sweeping National Transformation
    Plan to wean the economy off oil. Meanwhile the government
    said there are discussions and no decision had yet been made
    regarding income tax.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News