DHAHRAN – Saudi Aramco has welcomed the introduction of the new tax regime for all hydrocarbon producers operating in the Kingdom as another positive step in the diversification of the Kingdom's economy. Reacting to the Royal Order, Saudi Aramco President and CEO Amin H. Nasser said in a statement issued here Monday "we thank the Custodian of the Two Holy Mosques King Salman ibn ‘Abd Al-‘Aziz Al Sa'ud for the Royal Order announcing the reduction of Saudi Aramco›s tax rate to 50 percent from 85 percent. The new tax rate will bring Saudi Aramco in line with international benchmarks." The new tax regime will be implemented retrospectively effective January 01, 2017. Nasser reiterated that Saudi Aramco would continue to make a critical contribution to the diversification and growth of the Saudi economy in line with Saudi Vision 2030. A Royal Decree issued Monday announced new set of income tax rates on oil companies working in the Kingdom, ranging from 50 percent to 85 percent depending on the firms' investments. Earlier it was 85 percent across the board. Under the new regulation companies investing more than SR375 billion ($100 billion) will be subject to a 50-percent tax rate, a straight 35 percent reduction. "The Royal decree concerning taxes is in the interest of the Kingdom, its citizens and future generations," said Minister of Energy, Industry and Mineral Resources Khalid Al-Falih. He described the Royal Decree to reduce taxes on oil and hydrocarbon producers in the Kingdom as a positive step that will boost State's policies of diversification of income sources. He said the new taxation is in line with international rates. He said that any reduction in tax returns that might occur due to this decree will be compensated by distributing profits by state-owned companies and other income sources. The industrial and commercial sector in the Eastern Province welcomed the move and said that the new regulations was in line with international bench marks and will attract more investment in oil and oil related sector. Saleh Al-Humaidain, prominent media strategist and businessman, who was previously managing director of Al-Youm Group of Publication, said it was bit premature to go into details of the tax cut impact but for sure it will attract foreign investment in hydrocarbon companies and other oil related sectors and as a result business opportunities will increase and so will employment. Abdul Aziz Al-Qahtani, a leading businessman in the Eastern Province, termed the new tax cut as a landmark decision which is in line with Vision 2030. "We will now be ope to more international participation and investment and invariably bring in more business," he said. Tariq Al-Dossary, another businessman who deals in oilfield supplies in Saudi Arabia and neighboring Bahrain, welcomed the decision and said "it will change the business climate not only in oil sector but also in trade and industry. It is one giant step toward opening to the international market," he said. In an unrelated development, Saudi Aramco signed a cooperative Memorandum of Understanding with the Eastern Province Council for Social Responsibility (EPCSR) to create a deep-rooted corporate social responsibility culture in the region.
