The number of small and medium enterprises registered in Saudi Arabia grew by close to 10 per cent to about a million by the end of the third quarter of 2022.
The Arab world’s largest economy registered 978,445 SMEs by the end of September, up from 892,063 in the preceding quarter, the Saudi Press Agency reported on Wednesday, citing the Small and Medium Enterprises General Authority.
Funding from venture capitalists stood at 3.1 billion Saudi riyals ($826.67 million) in the first three quarters of this year, a 93 per cent increase from the same period in 2021.
Investment in the FinTech sector more than quadrupled during the period, with 22 deals, the SPA report said.
VC funding for start-ups in the Mena region rose 20 per cent annually to more than $2.3 billion in the first nine months of 2022, putting it on track to potentially surpass the total investments attracted last year, according to data platform Magnitt.
Egypt, the UAE and Saudi Arabia retained the top three positions in funding value and number of deals, capturing more than 75 per cent of overall Mena investments.
Saudi Arabia is diversifying its economy away from oil as part of its Vision 2030 programme.
The kingdom is developing projects across sectors such as property, infrastructure, petrochemicals, transport and hospitality in a push to attract investment and boost employment.
The Saudi economy is expected to grow at its quickest pace in a decade and could be one of the world’s fastest-growing economies this year, according to the International Monetary Fund.
Saudi Arabia’s economy grew 12.2 per cent in the second quarter, exceeding initial estimates and registering the fastest expansion in more than a decade on the back of higher oil prices.
Gross domestic product is forecast to expand 7.6 per cent this year, from 3.2 per cent in 2021, according to the International Monetary Fund, while Saudi investment bank Jadwa Investment has projected output this year at 8.7 per cent.
The country is forecast to be a vital driver of global trade growth, with its exports expected to expand at an average annual rate of more than 7 per cent to $354 billion by 2030, Standard Chartered said this year.
In October, top oil producer Saudi Aramco launched a programme to hasten the growth of SMEs in Saudi Arabia and boost their contribution to the country’s economic development.
The Taleed programme focuses on sustainable SME growth across several sectors through a portfolio of 20 initiatives, providing a “wide range” of support such as capability building, strategy development, training, market access, advisory services and business planning, Aramco said at the time.
The company has also established a $1.5 billion sustainability fund to invest in “breakthrough” technology and start-ups that will help to address climate change.
The fund, managed by Aramco’s venture capital arm, will invest in technology that supports the energy company’s 2050 net-zero goals while helping to develop new lower-carbon fuels.
It will initially focus on areas such as carbon capture and storage, greenhouse gas emissions, energy efficiency and hydrogen.
Which products are to be taxed?
To be taxed:
Flavoured water, long-life fruit juice concentrates, pre-packaged sweetened coffee drinks fall under the ‘sweetened drink’ category
Not taxed
Freshly squeezed fruit juices, ground coffee beans, tea leaves and pre-prepared flavoured milkshakes do not come under the ‘sweetened drink’ band.
Products excluded from the ‘sweetened drink’ category would contain at least 75 per cent milk in a ready-to-drink form or as a milk substitute, baby formula, follow-up formula or baby food, beverages consumed for medicinal use and special dietary needs determined as per GCC Standardisation Organisation rules
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What sanctions would be reimposed?
Under ‘snapback’, measures imposed on Iran by the UN Security Council in six resolutions would be restored, including:
- An arms embargo
- A ban on uranium enrichment and reprocessing
- A ban on launches and other activities with ballistic missiles capable of delivering nuclear weapons, as well as ballistic missile technology transfer and technical assistance
- A targeted global asset freeze and travel ban on Iranian individuals and entities
- Authorisation for countries to inspect Iran Air Cargo and Islamic Republic of Iran Shipping Lines cargoes for banned goods
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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
Results:
Men’s wheelchair 200m T34: 1. Walid Ktila (TUN) 27.14; 2. Mohammed Al Hammadi (UAE) 27.81; 3. Rheed McCracken (AUS) 27.81.
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