Investors are showing strong interest in the country's tourism potential. Photo: Saudi Tourism Authority
Investors are showing strong interest in the country's tourism potential. Photo: Saudi Tourism Authority
Investors are showing strong interest in the country's tourism potential. Photo: Saudi Tourism Authority
Investors are showing strong interest in the country's tourism potential. Photo: Saudi Tourism Authority

Business

Economy

Saudi Arabia closes 49 deals worth $925m in second quarter of 2022

The move is expected to create 2,000 jobs, says Ministry of Investment

Fareed Rahman
Fareed Rahman

August 08, 2022

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Saudi Arabia has signed 49 deals worth $925 million in the second quarter of 2022, as the Arab world’s largest economy continues to attract new investment into the country to diversify away from oil.

The deals were signed across sectors including advanced manufacturing, construction and real estate, information and communications technology, tourism, entertainment and sports.

The move will create 2,000 jobs, the Ministry of Investment in Saudi Arabia said on Sunday.

Some of the major deals include a $133.3m agreement between the Saudi Ports Authority and DP World to build a logistics park at Jeddah Islamic Port and a $37m funding round led by global finance major MasterCard into Saudi e-commerce firm HyperPay to expand the kingdom’s digital payment ecosystem.

“Despite global headwinds, we are seeing strong interest from global investors in diverse industries to partner with Saudi Arabia,” said the country's Minister of Investment, Khalid Al Falih.

The kingdom’s National Investment Strategy will “deliver on our Vision 2030 national objectives of seeing the private sector contribute 65 per cent to GDP [gross domestic product] and growing foreign direct investment to 5.7 per cent of GDP”, he added.

The National Investment Strategy, which was launched by Crown Prince Mohammed bin Salman in October, aims to attract 388 billion riyals ($103.47bn) in FDI annually, according to the state-run Saudi Press Agency.

Other investments signed by Saudi Arabia during the quarter include a strategic agreement with pharmaceutical multinational Novartis to grow Saudi Arabia’s biopharmaceutical capabilities, a $50m investment by Aramco’s Wa’ed Ventures into Saudi FinTech Wahed and a deal by Ma’aden to build the world’s largest solar-powered steam plant to be used to refine bauxite into alumina.

The latest data also highlights opportunities within Saudi Arabia’s tourism industry as the country focuses on building new tourism projects.

"The synergies between the National Investment Strategy and the National Tourism Strategy will see the development of a strong, attractive tourism product,” Mr Al Falih, said.

“While the global tourism industry remains subdued, tourism industry investors are showing strong interest in the potential of Saudi Arabia.”

  • Trojena will open in 2026 as part of Saudi Arabia's megacity of the future. Photo: Neom
    Trojena will open in 2026 as part of Saudi Arabia's megacity of the future. Photo: Neom
  • Trojena is designed to attract visitors, holidaymakers and winter sports enthusiasts from around the world. PA
    Trojena is designed to attract visitors, holidaymakers and winter sports enthusiasts from around the world. PA
  • The design plan for Trojena, an area in Saudi Arabia's planned megacity of Neom chosen to host the 2029 Asian Winter Games. AFP
    The design plan for Trojena, an area in Saudi Arabia's planned megacity of Neom chosen to host the 2029 Asian Winter Games. AFP
  • The Line is also being built at Neom. It will be free of cars and streets and have zero carbon emissions. Photo: Neom
    The Line is also being built at Neom. It will be free of cars and streets and have zero carbon emissions. Photo: Neom
  • Neom chief executive Nadhmi Al Nasr said The Line would make use of artificial intelligence technology to the fullest. Photo: Neom
    Neom chief executive Nadhmi Al Nasr said The Line would make use of artificial intelligence technology to the fullest. Photo: Neom
  • Neom city will be powered by clean energy, officials say. Photo: Neom
    Neom city will be powered by clean energy, officials say. Photo: Neom
  • Trojena in Neom will host the first outdoor snow skiing destination in the GCC region. Photo: Neom
    Trojena in Neom will host the first outdoor snow skiing destination in the GCC region. Photo: Neom
  • Neom lies in a desert bordering the Red Sea in Saudi Arabia. Reuters
    Neom lies in a desert bordering the Red Sea in Saudi Arabia. Reuters
  • Architects say Neom will be designed to make the most of its environmental surroundings. Photo: Neom
    Architects say Neom will be designed to make the most of its environmental surroundings. Photo: Neom
  • Andrew McEvoy, sector head for tourism at Neom, at Arabian Travel Market held at Dubai World Trade Centre. Pawan Singh / The National
    Andrew McEvoy, sector head for tourism at Neom, at Arabian Travel Market held at Dubai World Trade Centre. Pawan Singh / The National
  • The $500bn Neom project in the Tabuk Province of north-western Saudi Arabia is supported by the kingdom's Public Investment Fund. Photo: Saudi Commission for Tourism and Natural Heritage
    The $500bn Neom project in the Tabuk Province of north-western Saudi Arabia is supported by the kingdom's Public Investment Fund. Photo: Saudi Commission for Tourism and Natural Heritage

Saudi Arabia is developing a number of tourism projects, including Neom, a $500bn futuristic city comprising a nature reserve, coral reefs and heritage sites on a number of islands along the Red Sea, and Qiddiya, a huge entertainment and sports project.

The Red Sea Development Company, which is building a mega-tourism project on Saudi Arabia’s west coast, signed deals in May with hospitality groups Ritz-Carlton, Hyatt and Rosewood to develop luxury resorts. Radisson and Hilton also said that they are looking to open 20 and 59 new hotels in the kingdom, respectively.

The kingdom's national airline, Saudia, also said that it is adding 94 new destinations to bring visitors to Saudi Arabia, as new projects boost the kingdom's tourism potential.

Last week, Saudi Arabia said it set up a promotion authority to attract more regional and international investment.

Saudi Arabia, the world's leading oil exporter, recovered in 2021 from the coronavirus-induced slowdown, with economic activity picking up momentum this year as oil prices rose.

In the second quarter of this year, Saudi Arabia's economy grew nearly 12 per cent, according to flash estimates released by the kingdom’s General Authority for Statistics this week.

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Why it pays to compare

A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.

Route 1: bank transfer

The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.

Total cost: Dh567.25 - around 2.9 per cent of the total amount

Total received: €4,670.30 

Route 2: online platform

The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.

Total cost: Dh74.10, around 0.4 per cent of the transaction

Total received: €4,756

The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.

Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

The specs: Aston Martin DB11 V8 vs Ferrari GTC4Lusso T

Price, base: Dh840,000; Dh120,000

Engine: 4.0L V8 twin-turbo; 3.9L V8 turbo

Transmission: Eight-speed automatic; seven-speed automatic

Power: 509hp @ 6,000rpm; 601hp @ 7,500rpm

Torque: 695Nm @ 2,000rpm; 760Nm @ 3,000rpm

Fuel economy, combined: 9.9L / 100km; 11.6L / 100km

Updated: August 08, 2022, 6:54 AM
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