Saudi Arabia's Public Investment Fund has announced three initiatives to boost the growth of the kingdom's private sector as part of its efforts to diversify the economy away from oil and support its move towards innovation and technology.
They include measures to increase the share of local content spending in PIF’s domestic portfolio to 60 per cent by the end of 2025 under its Musahama programme, the PIF said at its inaugural Private Sector Forum, on Tuesday.
As part of its suppliers development programme, the PIF will also seek to upskill local suppliers and vendors to meet the growing requirements of the fund's portfolio companies.
Meanwhile, the fund's private sector hub will provide companies with "greater visibility on supplier and investment opportunities" offered by the PIF and its portfolio entities.
The hub, which is now live and contains more than 100 opportunities, will be continuously enhanced and updated, the PIF said.
“The empowerment of the private sector is one of PIF’s foremost priorities considering the private sector’s crucial role in the growth and development of the Saudi economy," said Jerry Todd, head of the national development division at the PIF.
“The launch of our Musahama local content programme and supplier development programme is a major step forward in our efforts to drive the growth of local content in the kingdom.
"Both of these programmes will ensure that PIF and its portfolio companies embed local content considerations in our activities and operations which will contribute directly towards developing local industries and building long-term supplier and vendor partnerships."
This will strengthen local capabilities, enhance the competitiveness of local players, improve supply chain resilience and stimulate innovation in the Saudi economy, Mr Todd said.
One of the world’s largest sovereign wealth funds with about $620 billion in assets under management, the PIF is at the centre of the Saudi Vision 2030 initiative to diversify the country’s economy away from hydrocarbons.
Under a five-year strategy announced in 2021, the PIF aims to more than double the value of its assets under management to $1.07 trillion and commit $40 billion annually to develop Saudi Arabia's economy until 2025.
It has made a flurry of announcements in recent months to support the private sector in the country.
Last month, the fund invested $1.3 billion in four domestic contractors to improve local supply chains for projects in the country, drive the use of advanced technology and help increase private sector local content.
The PIF subscribed to new shares — as part of the companies' capital increases — amounting to “significant minority stakes” in Nesma & Partners Contracting Company, ElSeif Engineering Contracting Company, AlBawani Holding Company and Almabani General Contractors Company.
In February, the fund also signed a joint venture agreement with US sustainable agriculture company AeroFarms to build indoor vertical farms in the kingdom and the wider Middle East and North Africa region.
The first farm in Saudi Arabia is expected to be the largest one in the Mena region, with an annual production of up to 1.1 million kilograms of crops, using proprietary agricultural technology, the PIF and New Jersey-based AeroFarms said.
The PIF's two-day Private Sector Forum, which began on Tuesday, gathered the fund's executives, ministers, senior government officials and representatives from 50 PIF portfolio companies, as well as more than 4,000 private sector participants from across sectors.
At the event, the PIF signed a preliminary agreement with the Local Content and Government Procurement Authority to collaborate on the development of relevant programmes and strategies that aim to increase local content for PIF and its portfolio companies.
Another pact was signed with the Building Technology Stimulus initiative under the Ministry of Municipal and Rural Affairs and Housing, which aims to explore opportunities to develop modern construction methods and relevant technologies to support the housing and construction sectors in Saudi Arabia.
A third preliminary agreement was signed with the Saudi Contractors Authority to collaborate on initiatives to support the local contracting sector, while another was signed with the Federation of Saudi Chambers to enhance the co-operation between the private sector and PIF's projects and investments.
The forum and the new initiatives are in line with the PIF's plans to "support the private sector in increasing its contribution to gross domestic product [to] up to 65 per cent by 2030, create job opportunities, localise technology and drive the transfer of technology and knowledge to Saudi Arabia", the PIF said.
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
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Tax authority targets shisha levy evasion
The Federal Tax Authority will track shisha imports with electronic markers to protect customers and ensure levies have been paid.
Khalid Ali Al Bustani, director of the tax authority, on Sunday said the move is to "prevent tax evasion and support the authority’s tax collection efforts".
The scheme’s first phase, which came into effect on 1st January, 2019, covers all types of imported and domestically produced and distributed cigarettes. As of May 1, importing any type of cigarettes without the digital marks will be prohibited.
He said the latest phase will see imported and locally produced shisha tobacco tracked by the final quarter of this year.
"The FTA also maintains ongoing communication with concerned companies, to help them adapt their systems to meet our requirements and coordinate between all parties involved," he said.
As with cigarettes, shisha was hit with a 100 per cent tax in October 2017, though manufacturers and cafes absorbed some of the costs to prevent prices doubling.
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