New financial measures set to boost non-oil revenues
Saudi Arabia could introduce a system for its millions of expatriates that would be similar to the Green Card system in the US.
The inclination, announced by Deputy Crown Prince Mohammad Bin Salman Al Saud in an interview with Bloomberg, would help the kingdom generate new revenues for the national economy.
No details were given by Prince Mohammad, but with around nine million foreigners living in the vast kingdom, making up one third of the total population, the system would be a source for the country as it seeks to implement an ambitious package of new reforms and measures that will considerably improve its non-oil revenues and “raise at least an extra $100 billion a year by 2020, more than tripling non-oil income and balancing the budget.”
“It’s a large package of programmes that aims to restructure some revenue-generating sectors,” Prince Mohammad told Bloomberg.
The emulation of the American Green Card system would be alongside more steps to restructure subsidies and the imposition of a value-added tax and a levy on energy and sugary drinks as well as luxury items, the deputy crown prince reportedly said.
Most of the foreigners in Saudi Arabia and fellow Gulf Cooperation Council (GCC) countries – Bahrain, Kuwait, Qatar, Oman and the United Arab Emirate – are Asians, mainly unskilled workers in the booming building and service sectors.
In his interview, Prince Mohammad expressed optimism the new measures would reinforce the government’s drive to reduce reliance on oil and to boost non-oil revenues.
“We did a quick fix in 2015 which increased our non-oil revenue by 35 per cent,” he said. “This year, we are trying to target over $25 billion. I believe we will succeed in achieving more than $10 billion in non-oil revenue in 2016.”
With the dramatic slump of oil prices, the GCC countries have been looking at viable options to generate non-oil sources and reduce threats to fiscal stability and sustainability.
Experts believe that hydrocarbon exports represent more than 80 per cent of the total revenue in the GCC countries where taxation is almost absent.
The main non-oil revenue base in the GCC states currently includes customs duties and fees and charges.
Bahrain, the first GCC country to discover oil in 1932, has been leading the way in the diversification of non-oil resources.
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