Saudi Arabia considers oil price-linked tax for Aramco: report

Saudi Arabia is mulling the introduction of a flexible tax system linked to crude oil prices for state-owned Saudi Aramco, ahead of the oil giant’s initial public offering (IPO) next year, Bloomberg reported, citing sources familiar with the matter.

The Kingdom is considering a proposal by Aramco to initially set the royalty as 20 percent – the same as the current fixed rate – and raise it automatically if oil prices rise substantially, it was reported.

No final decision has been made yet, however, one of the sources said.

A flexible rate would help the government raise extra revenue if oil prices climb.

In March this year, Saudi Arabia issued a royal decree stipulating that taxes paid by Saudi oil and hydrocarbon producers with capital investments exceeding SAR 375 billion would be lowered to 50 percent from 85 percent.

Riyadh plans to float about 5 percent of Aramco on domestic and international markets in 2018, in what is expected to be the world’s largest IPO.