Aramco chief says oil tax will be cut to lure investors to IPO

Saudi Arabia has promised it will reduce the overall tax rate paid by its national oil company to make its 2018 initial public offering - potentially one of the largest in history - more appealing to investors. “Definitely the fiscal regime will be changed," Saudi Arabian Oil Co. Chief Executive Officer Amin Nasser said in a Bloomberg Television interview on Tuesday in Davos, Switzerland. “When you look at the fiscal regime and the taxes, it has to be aligned with other listed companies.” Aramco, as the company is commonly known, currently pays a 20 per cent royalty on its revenue plus an 85 per cent tax on income, Nasser said. He declined to say what tax rate the kingdom is considering. Saudi officials said Aramco’s tax rate wouldn’t need to be slashed because the company - considered the crown jewel of the country’s economy - is able to make a profit even when oil prices plunge. In 2016, under the existing tax regime and with crude dipping to 12-year lows, Aramco was able to pay a dividend and fund its biggest-ever capital investment programme, Nasser said. "Based on the advice of the different banks that we use during the process of the IPO, we are setting a certain fiscal regime that will meet investors’ requirements,” Nasser said. (John Micklethwait and Javier Blas/Bloomberg)