Saudi Aramco Pres. and Chief Executive Officer Amin H. Nasser welcomed a Mar. 27 tax cut that he said would bring his company’s tax burden “in line with international benchmarks.”
In a move seen as preparation for an initial public offering of 5% of the company as early as next year, the government lowered Aramco’s tax rate to 50% from 85% (OGJ Online, Apr. 25, 2016).
The change applies to “those authorized to operate in oil and hydrocarbon material production in the kingdom,” according to a government statement.
The 50% rate applies to companies with capital investments in Saudi Arabia exceeding $100 billion. Rates of 65-85% apply to smaller investors.
In a follow-up statement, Finance Minister Mohammed bin Abdullah Al-Jadaan said the rate cuts won’t hurt the government’s ability to fund public services.
He said revenue declines from the tax cut would be offset by dividends from state-owned companies and other investment income.
