UK TAX STRATEGY DURING FISCAL YEAR 2023

Scope

This tax strategy was prepared in accordance with Paragraph 19 (2) of Schedule 19 of Finance Act 2016 and applies to the Saudi Aramco’s wholly owned corporate subsidiaries in the United Kingdom (collectively referred to as “Saudi Aramco UK”) for the financial year ending 31 December 2023 listed below:

• Aramco Overseas Company UK Limited (including its branch in Aberdeen);
• Aramco Trading Limited;
• SAEV Europe Limited; and
• Saudi Petroleum Overseas, Ltd.

Introduction

Saudi Aramco and its subsidiaries and controlled affiliates (collectively, the "Company Group") comprise a large multinational family of companies. We have a sophisticated and sizeable tax function led by tax counsel, and tax compliance and tax accounting professionals. Saudi Aramco regularly engages leading law and accountancy firms around the world to ensure that we obtain best-in-class legal and tax advice, which allows us to comply fully with our legal and tax obligations. Saudi Aramco does not undertake business transactions without sound legal and tax advice.

We strive to maintain the highest legal and ethical standards in the conduct of the Company Group's business. Our business is conducted and our operational structures are based on clear commercial considerations. Saudi Aramco engages in transactions and activities on a commercial basis.

Tax Governance 

All Company Group tax matters are governed by experienced tax professionals, collectively referred to as Global Tax. Within Global Tax, tax advisory, tax planning and risk management functions are led by the Director & Managing Counsel – Tax Law Department ("DMCTLD"), an experienced tax attorney who is responsible for providing legal advice related to tax. Tax accounting and tax compliance functions are led by the Global Tax Compliance and Reporting Lead ("GTCRL"), an experienced tax accountant who is responsible for ensuring that Saudi Aramco's financial statements properly reflect all taxes and for maintaining Saudi Aramco's tax compliance procedures and controls. Together, the DMCTLD and GTCRL are responsible for developing and monitoring Saudi Aramco's tax risk management protocol. They are supported by experienced tax professionals at Saudi Aramco, by tax teams within its controlled affiliates, and by best-in-class external counsel.

Tax Mission

The mission of Global Tax is to ensure that the Company Group contributes to the jurisdictions where it operates by paying the right amount of tax, in the right place, at the right time, in compliance with all applicable tax rules and regulations. This mission serves as the basis for the guiding principles (described below) of Saudi Aramco's tax management.

Guiding Principles

The management of taxes and tax risks at Saudi Aramco is guided by the following principles:

1. Compliance with tax laws. We are committed to complying with applicable tax laws and paying the full amount of tax legally owed in each jurisdiction. This requirement is paramount.
2. Accurate tax accounting and disclosure. We ensure that our financial statements properly reflect all taxes, including provisions for any uncertain tax positions, as required by applicable accounting standards.
3. Independent legal advice. In order to properly identify legal obligations and risks, the Company Group receives legal advice that is as clear, concise and objective as possible. The Company Group's internal legal advisors have a duty of honesty and care to the Company and should never feel pressured to deliver advice that distorts the law or gives a misleading impression of legal risk.

A comprehensive framework of policy and procedural documents elaborate on and operationalize these principles, and are approved by the leadership of Global Tax and used by tax teams to inform their handling of all tax matters. In the spirit of continuous improvement, the framework is regularly reviewed and updated, and periodic training is provided to all tax teams within the Company Group, to ensure that their knowledge and understanding of the policies and procedures remain up to date.

Company Group's Approach to Tax Risk Management

Global Tax proactively manages tax risk on an enterprise-wide basis to enable the Company Group to comply with all applicable tax laws, timely file all tax returns, pay the tax legally required, and prevent unnecessary tax claims or disputes. All members of the Company Group are required to document and formally adopt these requirements, such that they become a matter of official policy for each member.

We aim to prevent tax claims and disputes by employing qualified tax professionals, including experienced tax attorneys and tax accountants, adopting technically sound tax positions, documenting relevant facts, filing accurate and timely returns, and establishing working relationships with taxing authorities in the Kingdom of Saudi Arabia and other jurisdictions in which the Company Group operates.

We have a risk-averse approach to taxes and do not engage in transactions with insufficient commercial substance or that are motivated primarily by avoiding taxes. We consider the impact of taxes in the context of new business opportunities and other transactions, provided any transactions resulting in reduced taxes are supported by a strong commercial rationale and factual basis. We adopt a zero-tolerance approach to tax evasion and the facilitation of tax evasion.

Transparency

We engage with the tax authorities with integrity, respect, and a spirit of cooperation.

We recognize that tax authorities expect the Company Group to ensure tax compliance through appropriate governance mechanisms, including by having appropriate oversight, accountabilities, controls, behaviors, and people supported by robust processes and procedures. Saudi Aramco, Global Tax, and other stakeholders invest time and resources to ensure that the Company Group has the capacity to identify, assess, and mitigate tax risks.

Processes and procedures for managing UK tax risks

The Company Group’s approach to management of taxes and tax risks is steered by the guiding principles outlined above. It has a comprehensive framework to manage its tax affairs and the tax risks on an enterprise-wide basis. This framework has been fully implemented and operationalized by Saudi Aramco UK.
The framework includes:

1. Tax Policy, approved by Saudi Aramco’s Board of Directors;
2. Comprehensive set of Tax Protocols, which provide operating guidelines for all tax personnel in the Company Group; 
3. Ongoing training of enterprise tax personnel;
4. Technology solutions to support Saudi Aramco’s tax function.

In addition to the above, Saudi Aramco UK also ensures that all tax returns are filed accurately and timely, and proactively identifies and manages tax risks by reviewing on a regular basis all sources of tax risks and potential impacts to the business.

The precise actions to each tax risk vary depending on the issues identified and the priority assigned to them, but generally mitigation involves requiring high-risk items to be reviewed by qualified tax professionals, supported by the regional and global organization. When specific expertise or additional personnel is needed, Saudi Aramco UK leverages support of reputable external tax and legal advisors.

As highlighted above, we have a risk-averse approach to taxes, and we do not engage in transactions with insufficient commercial substance or that are motivated primarily by avoiding taxes. Saudi Aramco UK follows the Company Group’s zero-tolerance approach to tax evasion and the facilitation of tax evasion.

Saudi Aramco UK’s attitude to tax planning

Saudi Aramco UK’s approach to tax planning follows that of the Company Group’s and is focused on maintaining the highest legal and ethical standards in the conduct of Aramco business. We ensure that our activities are compliant with the applicable tax laws and regulations in the UK and do not engage in transactions with insufficient commercial substance or that are motivated primarily by avoiding taxes. In addition, we consider the impact of taxes in the context of new business opportunities and other transactions, provided any transactions resulting in reduced taxes are supported by a strong commercial rationale and factual basis. 

The level of acceptable risk for UK taxation

In line with the approach taken by the Company Group, Saudi Aramco UK has a risk-averse approach to taxes and aims to prevent tax claims and disputes by employing qualified tax professionals, adopting technically sound tax positions, documenting relevant facts, filing accurate and timely returns, and establishing working relationships with HMRC. 

Working with His Majesty’s Revenue and Customs (HMRC)

Saudi Aramco UK files its tax returns and pays its tax dues in a timely and accurate manner.  We strive to adhere to our values in the tax treatment of Saudi Aramco operations in the UK and ensure our tax affairs are always conducted in accordance with the applicable laws.

We always seek to be open and transparent when dealing with HMRC. We engage with them with integrity, respect, and a spirit of cooperation.