Saudi Arabia gives state oil giant tax break to help IPO

Saudi Arabia has announced a major tax rate cut for state-owned oil giant Aramco, lowering the company’s overall rate to be in line with its privately held competitors.

Aramco was paying 85 percent tax plus a 20 percent royalty; the royalty has not been reduced.

The oil giant’s rate will now be 50 percent, cutting tens of billions of dollars.

Saudi Arabia plans to sell about 5 percent of Aramco to raise cash to invest in new industries.

Despite having huge oil reserves, Saudi Arabia wants to diversify its economy, 60 percent of which is currently derived from sales of crude oil.

Aramco is the biggest crude oil supplier for China, and Saudi Arabia hopes that with its lower tax burden and thus increased profitability, Aramco will look like a good investment to China.