According to Bloomberg, the United States has criticized tax officials in Saudi Arabia and warned that conflicts with foreign companies could encourage investment in the country.
In a letter to the Saudi Ministry of Investment, the US embassy in Riyadh said “many multinational corporations operating in the country are facing tax problems, indicating a lack of transparency, stability and legal procedures.”
It is not clear when the message was sent, but some ministry officials have received it in recent days, according to sources, Bloomberg said. The U.S. embassy declined to comment, and the IRS and the Ministry of Investment did not immediately respond to requests for comment.
Saudi Prince Mohammed bin Salman has been criticized for trying to transform the oil-based economy and attract more foreign companies because he hopes to attract about $ 100 billion in foreign direct investment annually by 2030.
Reforming the state’s legal system and tax procedures is an essential part of the Saudi prince’s plan, but the reforms are not easy.
Although tax disputes have been common in the past, the latest pressure from the United States comes after unexpectedly large bills were paid to foreign companies.
Bloomberg announced last month that technology companies, including Uber Technologies, are resisting tens of thousands of dollars in taxes.
The United States has said the Kingdom’s tax authorities do not have “sufficient resources” and need better training to deal with “complex problems”.
The letter said that while US companies “applaud the state’s reform efforts, their experience is disappointing and could tarnish the image of the kingdom as a place for investment, and it will be in dangerous competition without progress.”
Saudi Arabia’s $ 840 billion economy is the largest in the Middle East, but many foreign companies prefer to have regional headquarters in less conservative countries such as the UAE.
Saudi Prince Mohammed bin Salman has eased social restrictions by introducing some exemptions in fees and taxes in an effort to make Riyadh a global business hub.
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