Aramco Tax Cut Boosts Upstream Value Ahead of Expected IPO
12 Apr 2017
Faced with declining government revenues from the oil and gas sector after the oil price crash and looking to diversify its economy, Saudi Arabia is reportedly planning to list 5% of its state-owned oil giant, Saudi Aramco, in an Initial Public Offering (IPO) in late 2018. With a view to making the listing more attractive by improving Aramco’s cash flows, the government published a decree on March 27 slashing the company’s tax rate from 85% to 50%. However, even taking into account the effect of this change, there is significant uncertainty over whether the company can achieve a much-vaunted US$2 trillion valuation.
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