Saudi Arabia adopts new revenue system with incentives for entities... and bonuses for employees
According to Al Arabiya, the system published by the official Al-Umm Al-Qura newspaper defines the state’s revenue sources to include fees and taxes, financial contributions, sales, penalties and fines, the sale and leasing of state assets, compensation, and financial returns resulting from contracts, natural resources, allocation, or investment, in addition to any other sources approved by a royal decree, royal order, or cabinet decision.
Under the system, the Ministry of Finance, except regarding oil revenues which are coordinated with the Ministry of Energy, is responsible for estimating revenues for a period of up to 10 fiscal years, based on data and estimates provided by government entities, including data on entity debts, if any. The ministry is granted the authority to discuss and amend these entities’ estimates and to notify them of the approved figures.
The system also allows the ministry to revise revenue estimates in emergency situations or when changes occur in economic and financial conditions.
The system stipulates that entities be granted incentives upon achieving an increase in their collected revenues and their growth, including the possibility of awarding motivational bonuses to employees and staff who contributed to this increase, in accordance with the controls set by the executive regulations.
Regarding revenue and debt collection, the system obligates entities to record revenues and debts during the fiscal year and to collect outstanding amounts within the timeframes specified by regulations. It permits them to engage the private sector in collection processes, subject to the controls outlined in the executive regulations.
Entities included in the state’s general budget are required to transfer all revenues and debts they collect to the unified treasury account at the Saudi Central Bank, in accordance with the deadlines specified in the regulations.
The Ministry of Finance is tasked with monitoring entities’ collection of their revenues and outstanding debts. It is also responsible for designating the entity accountable for collecting revenues or debts when jurisdiction is disputed among multiple entities.
The system obligates government entities to demand debtors to settle their debts on the next working day following the due date. If payment is not made within 30 days of the demand, the entity must submit a request to the competent judicial authority to enforce execution against the debtor’s assets to collect the debt.
The system affirms that state debt is “privileged” and does not expire by statute of limitations, while establishing specific mechanisms for debt forgiveness or installment plans based on the debt value and the debtor’s ability to pay.
The Minister of Finance has the authority to grant partial or full exemption from debts not exceeding 1 million riyals, in accordance with the rules and procedures specified in the regulations, which must include measures to verify the debtor’s inability to pay.
For debts exceeding 1 million riyals, exemption may be granted by an order from the Prime Minister, based on a recommendation from the Minister of Finance.
The system grants the head of the entity or their authorized representative the authority to approve installment plans for debts not exceeding 1 million riyals for a period not exceeding five years, if the debtor’s inability to pay in a lump sum is established.
The Minister of Finance or their authorized representative also holds the authority to approve installment plans for debts exceeding 1 million riyals, or for installments exceeding five years, provided that the total installment period does not exceed 25 years.
Debt installments may exceed 25 years by an order from the Prime Minister, based on the Minister of Finance’s recommendation. The authorized official may impose conditions for approving installments, including requiring the debtor to provide guarantees.
If a debtor delays payment of any installment for 30 days from its due date without providing an acceptable excuse, the entity must submit a request to the competent judicial authority to enforce execution against the debtor’s assets to collect all remaining outstanding installments.
The system prohibits the consideration of debt exemption requests arising from crimes of embezzlement, forgery, or fraud.
The system requires government entities to report any violations of the system’s provisions and their details to the Ministry of Finance and supervisory authorities within a period not exceeding 30 days from the date of discovery.
Furthermore, in the event that an entity fails to comply with the system’s provisions, the Minister of Finance may refer the matter to the Prime Minister to take necessary measures against it, ensuring compliance with the system’s provisions, in addition to applying regulatory sanctions and penalties against non-compliant employees or workers.
The system also adopts the accounting concepts, definitions, and standards approved for public sector accounting based on accrual accounting when preparing financial statements and maintaining accounting records.
The Minister of Finance, or his delegate, is granted the authority to exempt lending contracts from some or all provisions of the system, including rescheduling, restructuring, or repricing them, and to establish alternative provisions appropriate to their nature.
