Current Status

On Track (with challenges) — Non-oil government revenue has grown substantially from SAR 163 billion in 2016 to approximately SAR 450 billion in 2024, driven primarily by VAT, excise taxes, fees, and investment income. However, the SAR 1 trillion target remains distant.

Key Metrics

Trend Analysis

Saudi Arabia’s non-oil revenue transformation has been one of the most consequential fiscal reforms in the Kingdom’s history. From SAR 163 billion in 2016 — when non-oil revenue consisted primarily of fees, investment returns, and modest income from government services — the Kingdom has nearly tripled collections to an estimated SAR 450 billion by 2024. This growth reflects a fundamental restructuring of the fiscal framework through the introduction of new revenue instruments and the expansion of existing ones.

The Value Added Tax, introduced at 5 per cent in January 2018 and tripled to 15 per cent in July 2020, has been the single largest contributor to non-oil revenue growth, generating approximately SAR 165 billion annually. The Zakat, Tax, and Customs Authority (ZATCA) has modernised collection systems, reducing evasion and improving compliance rates to over 95 per cent for large taxpayers. Excise taxes on tobacco, sugary drinks, and energy drinks contribute an additional SAR 15 to 20 billion annually. Government fees and charges — including visa fees, municipal fees, vehicle registration, and business licensing — have been restructured and expanded, collectively generating over SAR 100 billion annually.

Investment income has become an increasingly important revenue stream, reflecting PIF’s growing portfolio and the returns generated by government financial assets. Dividend income from Aramco (which includes a non-oil component from downstream operations) and returns from SAMA’s foreign reserves provide substantial non-oil revenue streams. The Expatriate Levy, introduced in 2017, generates approximately SAR 30 billion annually, though its contribution may decline as Saudisation increases the Saudi share of the workforce. The diversification of revenue sources has reduced the Kingdom’s fiscal vulnerability to oil price shocks — a fundamental objective of the Fiscal Balance Programme and its successor, as tracked in the fiscal sustainability priority and the fiscal sustainability outlook analysis.

Methodology

Non-oil government revenue is reported by the Ministry of Finance in the annual budget statement and quarterly fiscal performance reports. It encompasses all government revenue excluding direct oil revenue (Aramco royalties, dividends attributable to crude production, and resource taxes). Revenue categories include taxes (VAT, income tax on foreign companies, excise tax), zakat (Islamic wealth tax on Saudi companies), fees and charges (visa, municipal, business licensing), investment returns (PIF dividends, SAMA returns), and other revenue. The classification follows the Government Finance Statistics (GFS) methodology aligned with IMF standards. Revenue figures are reported on a cash basis in quarterly updates and on an accrual basis in annual financial statements.

Related Priorities

Non-oil revenue growth is the fiscal dimension of economic diversification and is essential for long-term fiscal sustainability. It connects to Non-Oil GDP Contribution (a broader economic base generates more tax revenue), the Private Sector GDP target (a larger private sector generates more VAT and corporate income), and Credit Ratings (rating agencies assess fiscal diversification in sovereign credit assessments). The Fiscal Sustainability Programme’s objective of balancing the budget by 2030 depends on non-oil revenue growth closing the gap between spending and non-oil income. The development of a proportional, non-distortionary tax system is also a competitiveness consideration for FDI attraction.

Outlook

Reaching SAR 1 trillion in non-oil revenue by 2030 requires approximately SAR 550 billion in additional annual collections — more than doubling the current level within six years. This is among the most ambitious fiscal targets in Vision 2030 and would likely require additional tax instruments or rate increases beyond the current framework. Potential measures include corporate income tax reform, further broadening of the VAT base, personal income tax (currently not levied on Saudi nationals), or expansion of wealth-related taxation instruments.

Without major new tax instruments, the Vanderbilt Portfolio projects non-oil revenue reaching SAR 550 to 650 billion by 2030, driven by organic growth from the expanding tax base, continued compliance improvements, and growing investment income as PIF’s portfolio matures. The SAR 1 trillion target likely represents an aspirational endpoint that may require extension into the early 2030s or the introduction of new tax instruments currently not in the public policy discussion. The direction of travel is unambiguously positive, and fiscal diversification has already materially reduced the Kingdom’s vulnerability to oil price volatility.