Aramco IPO

[dan_s]

Saudi Arabia sweetens huge Aramco IPO with tax cut.

Reuters: Saudi Arabia's government has cut the income tax paid by national oil giant Saudi Aramco to smooth the company's initial public offer of shares next year, which is expected to be the world's largest equity sale. A royal decree on Monday, retroactive to Jan. 1, set a tax rate of 50 percent for the firm. Previously, Aramco had paid 85 percent tax, plus a 20 percent royalty levied at a different stage; the decree did not mention the royalty. The step appeared likely to reduce Aramco's tax burden by as much as tens of billions of dollars, which could make the firm much more attractive to private investors. Saudi authorities had been considering such a change for months, sources told Reuters. "The royal order is a milestone in setting the stage for the world's biggest IPO. I am sure there will be more such moves to follow in coming weeks and months," an oil industry executive said.

My take: Prior to this IPO, Saudi Arabia and their friends on Wall Street will do everything they can to jack up oil prices. - Dan