Taxes on goods to drive non-oil revenue growth in 2019: Jadwa

Taxes on goods and services will be the fastest growing segment in Saudi Arabia’s non-oil revenue next year, Jadwa Investment said in its latest report on Monday.

Taxes on goods and services will rise by SAR 22 billion and will contribute to much of the increase in non-oil revenue on a year-on-year (YoY) basis, it added.

In its recent preliminary budget report, the Saudi Ministry of Finance revised its 2018 budgeted revenue to SAR 882 billion, up from SAR 783 billion previously.

The quarterly budget performance report also showed that the government’s efforts to raise non-oil revenue through structured economic reform continue to bear fruit, Jadwa said.

“In Q3 2018, non-oil revenue was up by 45 percent YoY, with most of these gains coming from taxes on goods and services, which near doubled YoY to SAR 31 billion,” it added.

A rise in yearly revenue at a faster rate than expenditure meant the fiscal deficit narrowed to just SAR 7 billion in Q3 2018, pushing the total fiscal deficit to SAR 49 billion so far this year.

“As detailed in the preliminary budget report, the deficit is expected to total SAR 148 billion (5 percent of GDP) by the end of 2018. Taking this into account, we would expect to see the fiscal deficit widening in the final quarter of the year, in line with historical trends,” Jadwa said.