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Monday, Jun 02, 2025

Saudi Arabia’s tax regime may drive firms away, warns the US

Saudi Arabia’s tax regime may drive firms away, warns the US

The US has criticised Saudi Arabia’s tax authorities and warned that disputes with foreign companies risk discouraging investment in the country.
“Numerous multinational enterprises” operating in Saudi Arabia “have experienced tax issues exhibiting a lack of transparency, consistency and due process compared to what they have come to expect from other nations,” the US embassy in Riyadh said in a letter to the Saudi Ministry of Investment.

It wasn’t clear when the letter was sent but some ministry officials received it in recent days, according to people familiar with the matter. The embassy declined to comment, and the ministry didn’t immediately respond to requests for comment.

The US criticism comes as Crown Prince Mohamed bin Salman tries to transform the oil-dependent economy and draw in more international firms. He’s hoping to attract around $100bn of foreign direct investment each year by 2030. Overhauling the kingdom’s legal system and taxation practices are key parts of his plan, but the reforms have proved to be complicated.

While tax disputes have been common in the past, the latest pressure from the US follows a spate of unexpectedly large bills delivered to overseas firms.

Technology companies including Uber Technologies Inc are contesting levies worth tens of millions of dollars, Bloomberg reported last month.

The US said tax administrators in Saudi Arabia have “inadequate resources” and need better training to deal with “complex cases.”

The kingdom’s tax authority said in a statement Thursday that it was striving to apply best practices and has been working with other countries and international organisations to “eliminate inconsistencies and unexpected consequences of tax practices.”

The authority “always welcomes communication with taxpayers to solve any misunderstanding or disputes at any time,” it said in the statement. The Saudi tax system “grants all taxpayers the right to appeal through an independent judicial body if disputes have not been fully resolved through the different stages of objections that are processed and evaluated.”

While American companies “appreciate” the country’s reform efforts, their experience “has been disappointing and could result in a deteriorating image of the Kingdom of Saudi Arabia as a place to invest,” according to the US embassy’s letter. The country will be at a “serious competitive disadvantage” without improvements.
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