Analysis Of Economic Policy Options For Saudi Arabia

Introduction

Saudi Arabia enjoys a stable political and economic position in general and its oil economy as it has the second largest oil reserves, six gas reserves and the largest crude oil exporter in the world, which accounts for nearly 90% of exports. The Kingdom ranks 19th among the world's largest economies, Politically and economically in the world, for its Islamic position, its economic wealth, its control over oil prices, its global supply, and its large media presence in a number of satellite channels and print newspapers. In this paper I will discuss the four policy options for Saudi Arabia and in the last section of my work I will determine the current status of Saudi Arabia based on the latest economic news.

Changes in government purchases

Changes in government purchases are one of the policies through which the government can seek to shift the aggregate demand curveIn other words, by simply changing government procurement rates and all other things unchanged, this will have a clear impact on aggregate demand in Saudi Arabia. As we know, if the level of government purchases rises, the overall demand will go to the right.

Conversely, if the level of government purchases falls, total demand will shift to the left by the equivalent of the initial change in government procurement. Additionally, the high rates of government procurement will immediately increase overall demand. Conversely, low government procurement rates will directly reduce overall demand. At present, its military spending has increased dramatically following recent events, namely the war against al-Houthi in Yemen. This spending is happening for the first time since the events of the 1991 Gulf War. In addition, in the future, Saudi Arabia will continue to increase its spending to secure the state from its enemies from terrorist groups such as Al Qaeda, Iran and Houthi. Business Taxes It is well known that the government of Saudi Arabia relies heavily on oil revenues to finance expenditures. Thus, its tax rates are among the lowest in the world and are ranked first in the Middle East with the lowest number of taxes imposed on businesses and businesses.

Foreign investors see the Kingdom as a very favorable environment for tax purpose, according to the World Bank report, Saudi Arabia ranks 11th in terms of ease of doing business, and the World Economic Forum ranks the Kingdom seventh in terms of ease of paying taxes. But it is important to understand the different types of taxes applicable to foreign investors in the Kingdom, as well as the prevailing tax rates for each category. In fact, taxes on corporate profits in Saudi Arabia account for 15. 7% of total non-oil revenues, and Saudi Arabia is ranked 13th in terms of taxes collected for revenue in the Middle East.

Income Taxes

Income tax is a financial obligation of the taxpayer to the State Treasury according to its income or profits. It is a legal basis for the distribution of the public burdens annually between individuals and bodies according to their net income and in accordance with the standards enacted by the tax legislation. The State shall perform public services for all, bearing in mind that it is not taxable without law. The legislation gives the tax assessor the authority to audit, disclose and review the taxpayer's proof that the estimate was high, so that the taxpayer is the plaintiff and the plaintiff has the burden of proving what he claims.

Saudi Arabia currently has no tax on per capita income, but there are trends after 2030. This system will be approved in Saudi Arabia with many economic matters after the completion of the re-build of the Saudi economy at the moment and make many reforms.

Transfer payments

It is an economic term for payments paid by the state to its citizens and institutions, or vice versa, paid by institutions to the state (taxes) or to workers (bonuses) without charge. Also, old-age pensions paid by the government to employees after retirement are among the transfer payments. Taxes, for example, are payments paid by the individual or institution to the State; as well as bonuses and old-age pensions by work paid by an enterprise to its employees after retirement.

For the Kingdom of Saudi Arabia, there is an institution called "General Organization for Retirement", an independent government administratively affiliated with the Ministry of Finance. The Foundation is responsible for providing pensions to employees who have worked in the civil and military sectors. The Foundation also manages all retirement affairs in the Kingdom of Saudi Arabia.

Saudi Arabia is economically shrinking at the moment Official data indicate that Saudi Arabia's gross domestic product shrank on an annualized basis in the first quarter of this year, for the first time since the global financial crisis, but the private sector gradually improved. Inflation adjusted GDP fell 0. 5% year-on-year in January-March, its first drop since 2009.

Almost all of this was due to a 2. 3% contraction in the oil sector as Saudi Arabia cut its crude production under a global agreement between producer countries to support prices. The non-oil government sector contracted 0. 1%, showing that Riyadh continued to severely constrain government spending as it sought to reduce a large budget deficit caused by low oil prices. But the non-oil private sector grew 0. 9%, compared with 0. 5% in the revised quarter last quarter. This is the fastest growth of the private sector since the last quarter of 2015. Private firms have been hit hard by government austerity measures, including raising domestic energy prices and delaying government debt repayments. But late last year, Riyadh began settling its debts more quickly than the private sector.

Conclusion

Saudi Arabia is currently undertaking many reforms in the economy and restructuring in fullAnd provide job opportunities to solve the problem of unemployment and provide a decent life and benefits and incentives for the employee. Many international companies such as Apple and Huawei have held an investment partnership in Saudi ArabiaDirect investment without agent. Furthermore, government military purchases is on the rise due to political problems in the Middle East to protect the country and its wealth from terrorists and enemies.

On the business tax side, Saudi Arabia is the first country in the Middle East to be a magnet for foreign investors. In addition, there is no current income tax in Saudi Arabia, but there are tax trends after the 2030 reforms. Employees enjoy pension insurance after retirement through Saudi ArabiaThe establishment of the General Retirement Corporation, which is concerned with civil servants and the disabled after retirement.