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Saudi Arabia Adopts Measures to Control Used Cars Market, Reduce Prices

A car showroom in Al-Shifa district, Riyadh (Asharq Al-Awsat)
A car showroom in Al-Shifa district, Riyadh (Asharq Al-Awsat)
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Saudi Arabia Adopts Measures to Control Used Cars Market, Reduce Prices

A car showroom in Al-Shifa district, Riyadh (Asharq Al-Awsat)
A car showroom in Al-Shifa district, Riyadh (Asharq Al-Awsat)

The Saudi Zakat, Tax and Customs Authority announced that it was possible to calculate the value-added tax (VAT) on the profit margin of the sale of certified used cars, without taking into account of the total sale value.

This regulation will be implemented conditionally, effective from July 1, 2023.

According to information obtained by Asharq Al-Awsat, the new steps came in response to the demands of the Federation of Saudi Chambers, in order to regulate and control the local market as well as reduce the prices of used vehicles.

The Federation of Saudi Chambers has held several meetings with the authority for the purpose of implementing Article 48 of the executive regulations of the value-added tax system, which defines the mechanisms for the supply of used goods.

Faisal Abu Shusheh, head of the National Committee for Car Dealers in the Federation of Saudi Chambers, told Asharq Al-Awsat that the decision would balance prices by calculating value-added tax on profit margins, and therefore the addition would be symbolic and contribute to lowering prices.

For his part, Muqrin Al-Mutairi, owner of a car showroom, said that the new measure would contribute to regulating the market and limiting manipulation in the sale of used cars. He also stressed that the decision would help reduce the prices of used vehicles in the local market.

The Saudi Ministry of Commerce has recently taken accelerated moves to protect the local car market from improper practices, after it witnessed a rise in prices and delays in delivering vehicles to customers.

The Ministry of Commerce requested car dealers to publish prices, policies, instructions and special procedures on their websites, and prevented rental companies from selling new vehicles.

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BP Nears Deals for Oil Fields, Curbs on Gas Flaring in Iraq

British Prime Minster Keir Starmer (L) welcomes Prime Minister of Iraq Mohammed Shia al-Sudani to 10 Downing Street in London, Britain, 14 January 2025. (EPA)
British Prime Minster Keir Starmer (L) welcomes Prime Minister of Iraq Mohammed Shia al-Sudani to 10 Downing Street in London, Britain, 14 January 2025. (EPA)
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BP Nears Deals for Oil Fields, Curbs on Gas Flaring in Iraq

British Prime Minster Keir Starmer (L) welcomes Prime Minister of Iraq Mohammed Shia al-Sudani to 10 Downing Street in London, Britain, 14 January 2025. (EPA)
British Prime Minster Keir Starmer (L) welcomes Prime Minister of Iraq Mohammed Shia al-Sudani to 10 Downing Street in London, Britain, 14 January 2025. (EPA)

Iraq and British oil giant BP are set to finalize a deal by early February to develop four oil fields in Kirkuk and curb gas flaring, Iraqi authorities announced Wednesday.

The mega-project in northern Iraq will include plans to recover flared gas to boost the country's electricity production, they said.

Gas flaring refers to the polluting practice of burning off excess gas during oil drilling. It is cheaper than capturing the associated gas.

The Iraqi government and BP signed a new memorandum of understanding in London late Tuesday, as Prime Minister Mohammed Shia al-Sudani and other senior ministers visit Britain to seal various trade and investment deals.

"The objective is to enhance production and achieve optimal targeted rates of oil and gas output," Sudani's office said in a statement.

Iraq's Oil Minister Hayan Abdel Ghani told AFP after the new accord was signed that the project would increase the four oil fields' production to up to 500,000 barrels per day from about 350,000 bpd.

"The agreement commits both parties to sign a contract in the first week of February," he said.

Ghani noted the project will also target gas flaring.

Iraq has the third highest global rate of gas flaring, after Russia and Iran, having flared about 18 billion cubic meters of gas in 2023, according to the World Bank.

The Iraqi government has made eliminating the practice one of its priorities, with plans to curb 80 percent of flared gas by 2026 and to eliminate releases by 2028.

"It's not just a question of investing and increasing oil production... but also gas exploitation. We can no longer tolerate gas flaring, whatever the quantity," Ghani added.

"We need this gas, which Iraq currently imports from neighboring Iran. The government is making serious efforts to put an end to these imports."

Iraq is ultra-dependent on Iranian gas, which covers almost a third of Iraq's energy needs.

However, Teheran regularly cuts off its supply, exacerbating the power shortages that punctuate the daily lives of 45 million Iraqis.

BP is one of the biggest foreign players in Iraq's oil sector, with a history of producing oil in the country dating back to the 1920s when it was still under British mandate.

According to the World Bank, Iraq has 145 billion barrels of proven oil reserves -- among the largest in the world -- amounting to 96 years' worth of production at the current rate.