Saudi Finance Minister and Chairman of the Zakat, Tax and Customs Authority (ZATCA) Mohammed Al-Jadaan – during a panel discussion held under the theme “Addressing the Shadow Economy Using Digital Solutions”, as part of the Riyadh-hosted Zakat, Tax and Customs Conference said that the shadow economy today has become prevalent across the world and is not limited to one country.
According to the latest reports issued by the International Monetary Fund (IMF), 154 countries have shadow economies of 10-60%, where the average is 32% of the economy.
“This is substantially larger than comparative normal averages,” said Al-Jadaan, stressing that solutions of the government in addressing the shadow economy should be monitored carefully, as successful solutions in certain countries might not succeed in others.
Al-Jadaan noted that over the past five years, the Kingdom’s e-payment devices have reached 300,000 compared to today, where the number reached around 1.2 million e-payment devices.
In terms of digital payments, they have recently increased by 1,700%, while the shift in e-payments has reached 62% after they previously stood at less than 40%. In the business sector, payments have grown to 80%-82%.
He stressed that the technological progress in the Kingdom has contributed significantly to reducing the phenomenon of the shadow economy and the advanced development of the technological infrastructure, as well as the Central Bank and the technological progress and digital infrastructure, where it is much more advanced than the developed countries, reiterating that the shift in payment to digital payments reduces costs.
For his part, the Minister of Economy and Planning, Faisal Al-Ibrahim said that the latest estimate of the volume of the shadow economy in the Kingdom was close to the economies of developed countries, standing at 15%.
Al-Ibrahim noted that the volume of shadow economies has dropped in the Kingdom after launching solutions and initiatives.
He stressed that combating the shadow economy addresses economic challenges, such as low wages, low productivity, lack or shortcomings of competitiveness in the private sector, lack of access to social protection for all beneficiaries, and other challenges.