Taxation dominates G20 gathering in Riyadh

SAMA governor Ahmed Alkholifey at the G20 meeting. (Reuters)
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Updated 22 February 2020

Taxation dominates G20 gathering in Riyadh

  • Officials express optimism on the tackling of tax evasion and the continued strength of the financial sector globally

RIYADH: The two-day G20 Finance Ministers and Central Bank Governors meeting kicked off in Riyadh on Saturday with taxation dominating the agenda.

Saudi Finance Minister Mohammed Al-Jadaan said this year would represent a key test for tax transparency worldwide.

“It gives us the opportunity to assess what we have achieved collectively in the area of tax transparency and discuss possible ways to encourage further progress, and provides a platform to discuss the way forward to address the tax challenges arising from the digitization of the economy,” he said. 

The minister said that G20 states and the OECD had already achieved major successes in tackling tax evasion. “Today, members of the G20/OECD Global Forum on Transparency and Exchange of Information for Tax Purposes work together to implement the internationally agreed standards on tax transparency,” said Al-Jadaan. “These standards balance the need to access information for tax purposes and the need to protect taxpayers’ confidentiality.”

He said that more than 6,100 bilateral exchange agreements had been signed and that tax-authorities worldwide were now collecting tax revenues utilizing the automatic exchange of information mechanism.

“Information on 50 million financial accounts was exchanged by the end of 2019 for a total value of about €5 trillion ($5,4 trillion), and almost €100 billion in additional tax revenues have been identified, thanks to voluntary compliance mechanisms and investigations,” he said.

Dr. Ahmed Alkholifey, Governor of the Saudi Arabian Monetary Authority (SAMA) said that the global economy had faced headwinds caused by geopolitical uncertainties and social unrest in some parts of the world.

But he said the good news was that the financial sector, and notably the banking sector, has continued to strengthen in both advanced and emerging economies.

The governor also said he expected to see an improvement in the Saudi economy this year.

“As an open economy, Saudi Arabia, just as other countries in the region, is under the influence of these global developments. What I can say, in a nutshell, is that GDP growth in Saudi Arabia is projected to see an upturn in 2020.”

Ministers and central bank governors from the G20 countries and guest nations, as well as heads of international and regional organizations are attending the gathering in Saudi Arabia, the first Arab nation to hold the G20 presidency.


American Airlines threatens to cancel some Boeing 737 MAX orders

Updated 11 July 2020

American Airlines threatens to cancel some Boeing 737 MAX orders

  • American’s stand comes as airlines are finding financing increasingly difficult and expensive
  • Airlines have canceled orders for more than 400 MAX planes so far this year

DALLAS: American Airlines is warning Boeing that it could cancel some overdue orders for the grounded 737 MAX unless the plane maker helps line up new financing for the jets, according to people familiar with the discussions.
American’s stand comes as airlines are finding financing increasingly difficult and expensive as the coronavirus pandemic has crippled their operations.
American had 24 MAX jets before they were grounded in March 2019. It has orders for 76 more but wants Boeing to help arrange financing for 17 planes for which previous financing has or will soon expire, according to three people who spoke Friday on condition of anonymity to discuss private talks between the companies.
If the companies can’t reach an agreement, American could use MAX financing that is about to expire to pay for jets from Boeing’s archrival Airbus, one of the people said.
Chicago-based Boeing said in a statement that it is working with customers during “an unprecedented time for our industry as airlines confront a steep drop in traffic,” but did not comment on the talks with American. The Fort Worth, Texas-based airline declined to comment.
News of American’s threat to cancel some orders was first reported by The Wall Street Journal.
The situation underscores the strain facing airlines during the coronavirus pandemic. It has grown more difficult and expensive for them to finance planes. American’s negotiating stance doesn’t reflect a loss of confidence in the plane’s safety, the sources said.
The MAX was Boeing’s best-selling plane before crashes in Indonesia and Ethiopia killed 346 people and led regulators around the world to ground all MAX jets.
The coronavirus pandemic has compounded Boeing’s problems by causing a sharp drop in air travel and a loss of interest in new planes. Nearly 40 percent of the world’s passenger jets are idled, according to aviation data supplier Cirium, as most airlines have more planes than they need until travel recovers.
That has made it more difficult to finance planes. United Airlines and Southwest Airlines found foreign lenders who agreed in April and May to buy MAX jets and lease them to the airlines, but those carriers are in stronger financial situations than American.
The 17 planes in dispute were supposed to have been delivered to American at least a year ago. That has given the airline the option of canceling the order without penalty and recovering its down payments now, according to one of the people familiar with the matter. The deliveries have been delayed while Boeing works to fix a flight-control system suspected of playing a role in the crashes.
Airlines have canceled orders for more than 400 MAX planes so far this year, and 320 are no longer certain enough to count in Boeing’s backlog. Some were dropped because the airline buyer ran into financial problems, while others were swapped for different Boeing planes. The company had taken 4,619 orders through May.
Air travel in the US fell about 95 percent from the beginning of March until mid-April. Traffic has recovered slightly since then, but remains down more than 70 percent from a year ago. With little revenue coming in, airlines are slashing spending and preparing to furlough thousands of workers this fall.
American has accepted $5.8 billion in federal aid to pay workers through Sept. 30, reached tentative agreement on a $4.75 billion federal loan, and lined up billions more in available cash from private lenders to survive the travel downturn.