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Tax reforms are providing a boost to Saudi Arabia’s efforts to diversify the economy, but the kingdom’s “addiction to oil” remains.
Saudi Arabia’s Budget Performance Report for 1Q 2018, published this week, showed revenue for Q1 rising 15.4% year-on-year to $44.3bn. The key boost was in non-oil income: oil revenue, at $30.3bn, was up just 1.7% year-on-year. However, oil still retains its stranglehold on the economy, contributing 68.5% of total revenue, more than the full year 2017 figure of 63%.
The Finance Ministry attributes the 63% year-on-year increase in non-oil revenue to “the success of medium-term fiscal plans and efforts to diversify sources of the government’s income and achieve fiscal sustainability.” In particular the government’s non-oil revenue was boosted by taxes on goods and services, namely on oil product fees, excise taxes as of June 2017 and the introduction of 5% VAT on 1 January 2018 ( MEES, 2 March ). The tax take from these new sources of revenue rose to $6bn in the first quarter of 2018, four times the $1.5bn income recorded a year ago. That said, the non-oil revenue figure for Q1 was actually lower than those for Q2 and Q4 last year (see table). (CONTINUED - 875 WORDS)
DATA INSIDE THIS ARTICLE
|table||Saudi Arabia's Finances ($ Bn)|