Taxation dominates G20 gathering in Riyadh

SAMA governor Ahmed Alkholifey at the G20 meeting. (Reuters)
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Updated 22 February 2020

Taxation dominates G20 gathering in Riyadh

  • Officials express optimism on the tackling of tax evasion and the continued strength of the financial sector globally

RIYADH: The two-day G20 Finance Ministers and Central Bank Governors meeting kicked off in Riyadh on Saturday with taxation dominating the agenda.

Saudi Finance Minister Mohammed Al-Jadaan said this year would represent a key test for tax transparency worldwide.

“It gives us the opportunity to assess what we have achieved collectively in the area of tax transparency and discuss possible ways to encourage further progress, and provides a platform to discuss the way forward to address the tax challenges arising from the digitization of the economy,” he said. 

The minister said that G20 states and the OECD had already achieved major successes in tackling tax evasion. “Today, members of the G20/OECD Global Forum on Transparency and Exchange of Information for Tax Purposes work together to implement the internationally agreed standards on tax transparency,” said Al-Jadaan. “These standards balance the need to access information for tax purposes and the need to protect taxpayers’ confidentiality.”

He said that more than 6,100 bilateral exchange agreements had been signed and that tax-authorities worldwide were now collecting tax revenues utilizing the automatic exchange of information mechanism.

“Information on 50 million financial accounts was exchanged by the end of 2019 for a total value of about €5 trillion ($5,4 trillion), and almost €100 billion in additional tax revenues have been identified, thanks to voluntary compliance mechanisms and investigations,” he said.

Dr. Ahmed Alkholifey, Governor of the Saudi Arabian Monetary Authority (SAMA) said that the global economy had faced headwinds caused by geopolitical uncertainties and social unrest in some parts of the world.

But he said the good news was that the financial sector, and notably the banking sector, has continued to strengthen in both advanced and emerging economies.

The governor also said he expected to see an improvement in the Saudi economy this year.

“As an open economy, Saudi Arabia, just as other countries in the region, is under the influence of these global developments. What I can say, in a nutshell, is that GDP growth in Saudi Arabia is projected to see an upturn in 2020.”

Ministers and central bank governors from the G20 countries and guest nations, as well as heads of international and regional organizations are attending the gathering in Saudi Arabia, the first Arab nation to hold the G20 presidency.


BP said to be considering sale of Mideast ‘stranded assets’

Updated 08 August 2020

BP said to be considering sale of Mideast ‘stranded assets’

  • Major oil companies typically hold assets for the long term

LONDON: BP is preparing to sell a large chunk of its oil and gas assets even if crude prices bounce back from the COVID-19 crash because it wants to invest more in renewable energy, three sources familiar with BP’s thinking said.

The strategy was discussed at a BP executives meeting in July, the sources said, soon after the oil major lowered its long-term oil price forecast to $55 a barrel, meaning that $17.5 billion worth of its assets are no longer economically viable.

But even if crude prices bounce back to $65-$70 a barrel, BP is unlikely to put those assets back into its exploration plans and would instead use the better market conditions as an opportunity to sell them, the three sources said.

Major oil companies typically hold assets for the long term, even when crude prices plunge, with a view to start bringing more marginal production online when market conditions improve.

However, BP’s new divestment strategy, which has not previously been reported, means there will be no way back for the British energy company once it has offloaded its so-called stranded oil and gas assets.

BP did not respond to requests for comment.

The new strategy also sheds more light on chief executive Bernard Looney’s plan to reduce BP’s oil and gas production by 40 percent, or at least 1 million barrels per day, by 2030 while expanding into renewable energy.

“It is a simple calculation of natural production decline and planned divestment,” said a BP source, explaining how BP became the first big oil company to pledge a large cut in its oil output.

For decades, BP and rivals such as Royal Dutch Shell and Exxon Mobil have promised investors that production would continue to rise. But as climate activists, investors, banks and some governments raise pressure on the industry to reduce emissions to help cool the planet, European oil firms are changing tack and pledging to invest more in renewable energy sources.

US rivals are under less government pressure and have not made similar commitments on renewables.

“As we look at the outlook for BP over the next few years and as we see production declining by 40 percent it is clear we no longer need exploration to fund new growth,” Looney said this week. “We will not enter new countries to explore.”

He said that BP would continue to explore for oil near its existing production infrastructure as those barrels would be low cost — and help boost BP’s cash flow to fund its transition to cleaner energy.

BP also raised its target this week for returns from asset sales to $25 billion between 2020 and 2025, of which about $12 billion has already been lined up.

Parul Chopra, analyst at Rystad Energy, said in addition to Angola, he expected BP to move out of Azerbaijan, Oman, the UAE and Iraq.

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