Saudi Arabia has no plans to introduce an income tax, and the 15 percent value-added tax introduced last year is temporary, Saudi Arabian Crown Prince Mohammed bin Salman said in a TV interview on a state news channel Tuesday night.
While the kingdom has taken great strides to diversify its economy away from oil, namely through initiatives under the ambitious Vision 2030 plan, the country was still hard-hit last year as oil prices bottomed out amid the coronavirus pandemic.
The decision to raise the value-added tax to 15 percent last year “will be temporary from one to five years maximum, with VAT target at 5 percent to 10 percent”, the crown prince said.
In the interview, Mohammed bin Salman also said that some of the government’s shares in Aramco could be transferred to the sovereign wealth fund, known as the PIF. The fund is worth $360 billion.
The speech was given as Vision 2030 turns five years old, and the crown prince, known for his role in driving modernisation in Saudi Arabia, spoke about how the kingdom must pass laws and regulations in line with international norms to attract tourists and foreign investment.
“When you talk about the Public Investment Fund, when you have influence through the world and a good reputation throughout the world, then the world would be open to the investment of our fund, which in turn will attract new opportunities for us to invest in,” he said, giving the example of Uber’s move into the kingdom in late 2019.
He continued: “If you want to double foreign investments… and you tell investors to invest in your country that is running on an unknown system that their lawyers don’t know how to navigate nor know how those regulations are applied and enforced then those investors will cut their losses and not invest.”
As part of their plans to diversify their economy and create jobs, the kingdom has placed an emphasis on tourism.
“If you want tourists to come, if you aim to attract 100 million tourists and to create 3 million jobs and you say that you are following something new other than common laws and international norms, then those tourists will not come to you,” he said.
The kingdom has unveiled a number of tourism development plans, including AlUla, the Red Sea Development project, and Neom, a glitzy $500 billion city that aims to be carbon-emission free.
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