Saudi Arabia Cuts Tax For Oil Producers Ahead Of Aramco IPO
Apr 05 2017
The valuation of Saudi Aramco heavily depends on the tax regime, and how profits are being split between the government-from taxes and royalties-and the owners.
The government aims to sell up to 5 percent of Aramco, listing the shares in Riyadh and at least one foreign exchange, to raise cash for investment in new industries, as the kingdom seeks to diversify its economy beyond oil exports in an era of cheap crude.
Saudi Arabia has set a range of income tax rates for producers of oil and hydrocarbons, the official Saudi Press Agency reported on Monday, quoting a royal decree.
"Assuming long-term oil prices averaging USD 75 per barrel, the valuation of the company increases from USD 0.4 trillion to USD 1.4 trillion", he said in a report.
He described the Royal Decree to reduce taxes on oil and hydrocarbon producers in the Kingdom as a positive step that will boost State's policies of diversification of income sources.
"This tax change has a huge impact on the valuation of Saudi Aramco, said Espen Erlingsen, vice president of analysis at Rystad Energy, in a statement".
Saudi Aramco claims that it has 261 billion barrels of oil in reserves, more than all of North America's oil reserves.
Saudi Aramco is planning to go public next year.
Aramco now pays a 20 percent royalty and 85 percent tax to the government, Saudi officials have said.
"This move carries strategic benefits for Saudi Arabia, its citizens and future generations", Finance Minister Mohammed al-Jadaan said in a statement about the tax cut.
85% on companies whose total invested capital in the Kingdom does not exceed SR225 billion.
Using a different valuation method, enterprise value per flowing barrel, suggests a figure in the range of United States dollars 1 trillion to USD 1.5 trillion, though the expected long life of Aramco's reserves compared with other companies means Aramco could command a premium to those numbers, Bernstein said.
"Any reduction in tax revenues arising from this Royal Order is replaced by stable dividend payments and other sources of revenue from hydrocarbon producers to the government".
Apr 05 2017 'Prison Break': 5 Things to Know Before Season 5
You are going to find this hard to believe but Fox has gotten the band back together and " Prison Break " has returned. What has you most intrigued by what lies ahead for Michael and Lincoln this spring? "You just have to embrace it".
Apr 05 2017 Equities rise on positive global cues, strong rupee
The wider 51-scrip Nifty of the National Stock Exchange (NSE) was up 29.95 points or 0.33 per cent at 9,173.75 points. Hong Kong's Hang Seng was up 0.28 per cent while Shanghai Composite edged up 0.04 per cent in early trade today.
Apr 05 2017 5 killed in shootings on Chicago's South Side
His identity was not released Saturday and Area South detectives were investigating the events leading up to the shooting. Police department brass say the vast majority of the killings are tied to the gang-fueled drug trade in those areas.
Apr 05 2017 Judge halts shutdown of last Kentucky abortion clinic
The implication here, of course, is that the transfer agreement required by the state was made impossible by the state. Governor Matt Bevin (R-KY) is hell-bent on making safe, legal abortion access a thing of the past in his state.
Apr 04 2017 Android 7.1.2 Lands On The Nexus Player And Pixel C
Now, Pixel C users simply have to swipe up from the bottom of the screen, and the apps installed on the tablet will be displayed. It is worth noting that the update could take a few days until it's received by all users in the US, MobiPicker reported.
Apr 03 2017 Reading v Leeds - the story so far
We didn't score them which made it hard , but thankfully Yann did score that goal. " We don't know ", he told BBC Radio Leeds when asked about Jansson's fitness.