Saudi Arabia Improves Tax, Customs Procedures by Merging Two Govt. Agencies

The Saudi Cabinet approves merging the General Authority of Zakat and Tax with the General Authority of Customs to form an umbrella unit named “Zakat, Tax and Customs Authority", Asharq Al-Awsat
The Saudi Cabinet approves merging the General Authority of Zakat and Tax with the General Authority of Customs to form an umbrella unit named “Zakat, Tax and Customs Authority", Asharq Al-Awsat
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Saudi Arabia Improves Tax, Customs Procedures by Merging Two Govt. Agencies

The Saudi Cabinet approves merging the General Authority of Zakat and Tax with the General Authority of Customs to form an umbrella unit named “Zakat, Tax and Customs Authority", Asharq Al-Awsat
The Saudi Cabinet approves merging the General Authority of Zakat and Tax with the General Authority of Customs to form an umbrella unit named “Zakat, Tax and Customs Authority", Asharq Al-Awsat

The latest Saudi efforts to optimize and restructure government agencies to speed the implementation of the national transformation plan “Vision 2030” saw the merger of the General Authority of Zakat and Tax (GAZT) with the General Authority of Customs.

On Tuesday, the Saudi Cabinet, chaired by King Salman bin Abdulaziz, approved merging the two bodies under an umbrella authority named “Zakat, Tax and Customs Authority (ZTCA).”

Moreover, the Cabinet approved the regulation of the new organization.

Efficiency-driven restructuring of government bodies helps resolve obstacles standing in the way of achieving the goals of Vision 2030, experts told Asharq Al-Awsat, adding that the merger has produced a valuable agency in terms of contribution to the Kingdom’s economic growth.

Despite reaffirming that establishing the ZTCA will help in overcoming authority-related challenges, Saudi Shura Council member Fadl al-Buainain pointed out the need to ensure a smooth integration.

“It is important to point out the importance of the merger procedures, and the necessity for their streamlining and non-impact on the procedures of the two relevant bodies associated with them in the business sectors,” said al-Buainain.

“Saudi Arabia’s decision to merge GAZT with the General Authority of Customs will enhance security, business and trade exchange, in addition to other Zakat, tax and customs procedures,” Mohammed Al-Jadaan, Minister of Finance and GAZT chairman, said in a statement.

“The newly merged entity is in line with the latest international practices and will boost operating as well as cost efficiency,” Al- Jadaan affirmed, adding that the government’s efforts to develop the state-owned entities continuously came within Saudi Vision 2030.

According to the minister, the great deal of attention Saudi leadership gives to the nonstop advancement of all state agencies and human capital represents one of the essential pillars for realizing Vision 2030.



What are Bitcoin Treasury Strategies, the Latest Trend in the Public Markets?

FILE - An advertisement for the cryptocurrency, Bitcoin, is displayed on a building in Hong Kong on Nov. 18, 2021. (AP Photo/Kin Cheung, File)
FILE - An advertisement for the cryptocurrency, Bitcoin, is displayed on a building in Hong Kong on Nov. 18, 2021. (AP Photo/Kin Cheung, File)
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What are Bitcoin Treasury Strategies, the Latest Trend in the Public Markets?

FILE - An advertisement for the cryptocurrency, Bitcoin, is displayed on a building in Hong Kong on Nov. 18, 2021. (AP Photo/Kin Cheung, File)
FILE - An advertisement for the cryptocurrency, Bitcoin, is displayed on a building in Hong Kong on Nov. 18, 2021. (AP Photo/Kin Cheung, File)

Certain public companies, including one founded by President Donald Trump, have been going on a cryptocurrency buying spree, capitalizing on higher token prices and a softening regulatory environment to load up on the attention-grabbing investment.

Sixty-one publicly-listed companies not primarily engaged in digital assets have adopted what are known as bitcoin treasury strategies, in which firms allocate a portion of their cash and reserves toward the world's largest cryptocurrency, according to a report from Standard Chartered.

Here is what you need to know about the trend:

WHY ARE COMPANIES DOING THIS?

Many of those companies are seeking to replicate the success of Strategy, formerly known as MicroStrategy, a software company that began accumulating bitcoin in 2020 and now holds more than $63 billion worth. Its stock is up more than 3,000% since 2020 as the price of bitcoin has skyrocketed, hitting fresh all-time highs above $110,000 this year. Strategy copycats have doubled their holdings in bitcoin in just the last two months to collectively hold just under 100,000 bitcoin, Standard Chartered said. Those firms include Trump Media & Technology Group, which raised $2.5 billion last month to invest in bitcoin.

While investors can readily buy bitcoin directly or through an exchange-traded fund, investors typically cannot get the same kind of leverage a public company might be able to get through the convertible debt markets to buy bitcoin. Companies like Strategy trade at a premium to their bitcoin holdings because investors believe that those firms can utilize their access to credit markets to purchase even more bitcoin.

Strategy and Trump Media & Technology Group did not immediately respond to requests for comment, reported Reuters.

WHICH COMPANIES ARE DOING THIS? Besides Strategy and Trump Media & Technology Group, a joint venture announced in April between SoftBank, stablecoin issuer Tether, and Cantor Fitzgerald - previously helmed by US Commerce Secretary Howard Lutnick - caught investors' attention. The group is launching a $3.6-billion venture called Twenty One with the goal of acquiring bitcoin.

SolarBank, a Toronto-based solar energy company, announced this month it would implement a bitcoin treasury strategy, saying it would expose the company "to a new category of tech-savvy investors." SolarBank has not disclosed how much bitcoin it plans to buy, only saying that the allocation strategy will be determined by management.

"Traditionally, people invest in utilities as (an) afterthought. It's a very low return. It's a stable return," said SolarBank CEO Richard Lu. "So, how do we bridge the excitement of the new world and a classic industry? We feel that the crypto part of that is a bridge we need to cross."

Upexi, a consumer products company, recently launched a treasury for Solana, another top cryptocurrency.

"It is a great way for a company to really bring attention to itself and grow," said Brian Rudick, the firm's chief strategy officer.

"If a company has a fiduciary duty to do what's best for shareholders, and if you're going to raise funds and invest it in the operating business, or if you can invest in funds and put it into a digital asset treasury that the market is rewarding companies that do so, you should do the latter," Rudick said.

WHY NOW?

The trend comes as Trump has sought to overhaul US cryptocurrency policy after courting cash from the industry on the campaign trail. He signed an executive order in March to establish a strategic bitcoin reserve and has hosted industry leaders at the White House.

Those moves have boosted the price of bitcoin and other cryptocurrencies.

"It may be that some firms are trying to get political attention. This is clearly something President Trump has signaled his interest in," said Chester Spatt, a finance professor at Carnegie Mellon University.

The stark shift in policy under Trump "is a serious tailwind for more and more institutions to get into the space," said Roshan Robert, CEO of crypto exchange OKX. "How institutions are looking at building out treasury applications is just a part of that broader picture."

WHAT ARE THE RISKS?

It is unclear if the various crypto treasury strategies will ultimately be successful, particularly if firms are buying in now as prices flirt with record highs in a sector that is no stranger to volatility.

Charles Schwab, in a report last month, noted that if a company has significant crypto holdings that suddenly collapse in value, the firm could experience a liquidity crisis.

Standard Chartered estimated that if bitcoin were to fall back below $90,000 it would put half of companies' bitcoin treasuries underwater.

"As always, there will be some really, really big winners and some really big losers whenever there's a mania like this," said Ravi Doshi, the global co-head of markets at crypto platform FalconX.