The post-oil plan for the Kingdom of Saudi Arabia

The Kingdom of Saudi Arabia has been through major economic development in the last 10 years, specifically after 2015. Saudi Arabia spent billions on health and education and infrastructure projects. For example, in the last 10 years Saudi Arabia has spent SAR 1.2 Trillion on education alone and approximately the same number on health.

Saudi Arabia wants to diversify its sources of income and reduce its dependence on oil to less than 20 percent. In April 2016, Vision 2030 was announced, this is the post-oil plan for the Kingdom of Saudi Arabia and is built on 3 pillars that draw on KSA’s intrinsic strengths;

1. The heart of the Arab and Islamic Worlds
2. The investment powerhouse
3. The hub connecting three continents

The complete program covers;

• Quality of Life Program
• Financial Sector Development Program
• Housing Program
• Fiscal Balance Program
• National Transformation Program
• Public Investment Fund Program
• Privatization Program
• National Companies Promotion Program
• National Industrial Development and Logistics Program
• Strategic Partnership Program
• Hajj and Omrah Program (Pilgrimage)
• Human Capital Development Program
• National Character Enrichment Program

Vision 2030 is a bold yet achievable blueprint for an ambitious nation. Saudi Capital Market Authority and Saudi Arabia Monetary Authority are also very active is establishing and regulating financial markets and eco system.  

Taxation

Value Added Tax
Saudi Arabia introduced Value Added Tax (VAT) on 1st January 2018. The introduction of VAT is a key part of the Kingdom's broader plan to improve fiscal sustainability and diversify government revenues.

The VAT rate is set at a standard rate of 5%. Some goods and services are zero rated. All Taxable Persons with an annual turnover of more than 375,000 SR must register for VAT. There is monthly reporting for those with sales of more than SAR 40 Million and quarterly for all others.

Excise Duty
Tax levied on goods having adverse impact on public health or environment ‎or on luxury goods in varying proportions, which include soft drinks, energy drinks and ‎tobacco and its derivatives was introduced in May 2017.‎

Transfer Pricing
Kingdom’s Transfer Pricing Bylaws were introduced which apply to all Taxable Persons in the Kingdom insofar they are meeting the obligations of Article 18 of the Bylaws. These set out a framework to set prices for Controlled Transactions, including but not limited to transfers of goods, services, loans and Intangibles (intellectual property).

Our Services

We welcome new companies entering Saudi Arabia and can provide a wide range of services. We are also continuously strengthening our team’s expertise and improving our tools and methodologies to service local and international market.

We have recently been granted licence to practice Liquidations and Bankruptcy services within our portfolio.  

We welcome collaboration between IAPA members and knowledge share.

For more information, please contact:

Mobin Karamat
E: m.karamat@ihacpa.com

Alaziq Alzailaie