Saudi Arabia will not reduce value added tax any time soon, but will consider doing it when it public finances will have improved. This was stated by Saudi Finance Minister Mohammed Al-Jadaan .
The goal of the VAT is to deal with the shock of the Corona pandemic, he said. There will be no VAT cut anytime soon, he told the media, on the sidelines of the Group of Twenty (G20) meetings in Rome.
Al-Jadaan expects the Kingdom’s general budget to record a deficit at the end of this year. “We have a tendency to maintain spending control in the Kingdom despite the increase in revenues. We want to continue working efficiently, but we may raise spending to cover inflation in the future,” he said.
In the third quarter of this year, the Saudi budget achieved the first quarterly surplus since the first quarter of 2019, which amounted to SR6.7 billion, with an increase in oil revenues by 60 percent on an annual basis, and a limited decline in public expenditures, according to data released by the Ministry of Finance on Sunday.
Al-Jadaan described the G20’s approval of taxes on large companies as “excellent”. It would contribute to attracting these companies to Saudi Arabia, with all states having the same tax benefits,creating more justice, he said.
On energy markets, Al-Jadaan said that investment in fossil fuels is important and necessary for the world economy, and the real challenge is in gas, not oil, and any failure in these investments will cause a major global energy crisis.
The Kingdom is an influential country in energy markets, and our goal is to find a balance between supply and demand, and to ensure energy supplies to the markets, he said.
He pointed out that the International Monetary Fund (IMF), during Saudi Arabia’s presidency of the G20, provided $650 billion to developing countries, of which Saudi Arabia’s share was $13 billion.
Al-Jadaan also pointed out that from 2015 to 2019, Saudi Arabia reduced carbon emissions by 3 percent, while the G20 countries increased their emissions by 2 percent in the same period.
Saudi Arabia has major plans for renewable energy and the use of the energy mix, with investments worth tens of billions of dollars, Al Jadaan said.
The Kingdom is in agreement with the G20 about seeking to achieve the goal of limiting global warming to 1.5 degrees Celsius, “but the commitment is two degrees, he said.
Al-Jadaan pointed out that 80 percent of the world still depends on conventional energy. Working on the carbon circular economy and the energy mix is the best solution for the global economy, he said.