MOSCOW (MRC) -- 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, said Bloomberg.
"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 percent royalty on its revenue plus an 85 percent 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 program, 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.
To read a wrap of oil views from the World Economic Forum in Davos, click here. Saudi Arabia is looking at markets including Hong Kong, London, New York and possibly even Canada as international venues for the sale. The kingdom will offer 5 percent of the world’s biggest oil producer as part of a plan by Deputy Crown Prince Mohammed bin Salman to set up a giant biggest sovereign wealth fund and help reduce the economy’s reliance on hydrocarbons.
Nasser said the kingdom was considering whether to do a double listing, with shares sold in the domestic market in Riyadh and a foreign exchange, or a triple-listing, with two foreign locations on top of the local bourse.
As MRC informed earlier, Pertamina and Saudi Aramco finalized an agreement on a USD5 billion expansion of Indonesia's largest oil refinery in Central Java.
Saudi Aramco, officially the Saudi Arabian Oil Company, is a Saudi Arabian national oil and natural gas company based in Dhahran, Saudi Arabia. Saudi Aramco's value has been estimated at up to USD10 trillion in the Financial Times, making it the world's most valuable company. Saudi Aramco has both the largest proven crude oil reserves, at more than 260 billion barrels, and largest daily oil production.
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