Saudis Said to Mull Hiking Tax on Local Banks to as Much as 20% - Bloomberg

Saudis Said to Mull Hiking Tax on Local Banks to as Much as 20% - Bloomberg:

Saudi Arabia is considering plans to increase an Islamic tax paid by local banks to as much as 20 percent, or double the current rate, according to people with knowledge of the matter, as the world’s biggest oil exporter seeks to bolster alternative sources of revenue.

The tax authority is in talks with lenders about raising the religious levy, known as Zakat, potentially bringing it in line with the 20 percent rate paid by foreign banks in the kingdom, the people said, asking not to be identified because the discussions are private. The talks are ongoing and the final rate could be lower, they said.

Local lenders started paying Zakat at 10 percent of profit after deducting returns on government bonds from last year as part of a settlement with the authority. They used to pay at 2.5 percent of equity and the new rate was applied retrospectively for many years, in some cases stretching as far back as 2002. A spokesman for the General Authority of Zakat and Tax declined to comment.