What Will VAT Increase in Saudi Arabia Mean for PPPs?

Bracewell’s Dubai Partner Andrej Kormuth writes about the possible implications of the VAT increase on public-private partnerships in the region’s largest energy market.

Saudi Arabia’s Minister of Finance, Mohammed Al-Jadaan, announced on 11 May 2020 that VAT in the Kingdom (currently at 5%) will be increased to 15% from 1 July 2020.

While this move is undoubtedly a sound fiscal step in the context of the ongoing global economic slump resulting from the COVID-19 crisis, the timing of the announcement has taken most (particularly in the CAPEX heavy infrastructure and utilities market) by surprise. It goes without saying that all PPP developers, in whatever sector, need to take a fresh look at their resultant cash-flow and revenue generation position and consider such revised model against their contractual entitlements.

Click here to read the entire piece on Energy & Utilities.