Saudi Crown Prince Mohammed bin Salman’s severe financial pressures are reportedly driving increasingly aggressive measures, with the latest involving a demand that South Korean construction company DL E&C Co pay $555 million (SAR 2.10 billion) in connection with projects it carried out in Dammam in 2006 and the years that followed.

The company has been formally notified that payment is required as soon as possible. However, it has challenged the demand on several grounds:

▪️ The projects were planned and designed in South Korea.

▪️ The raw materials were sourced from South Korea.

▪️ The company paid taxes in South Korea on the basis of the above activities.

▪️ Accordingly, the Saudi claim constitutes a violation of the double taxation avoidance agreement signed between Saudi Arabia and South Korea.

▪️ The demand also contravenes Saudi tax law, which does not permit companies to be issued tax assessments for projects completed more than five years earlier.

▪️ Furthermore, the amount claimed is arbitrary and lacks any clear tax basis.

In an official disclosure submitted to the Korea Exchange, the company said it would challenge the Saudi decision through domestic legal channels before pursuing international remedies if necessary.

DL E&C maintains its regional headquarters in Dammam and undertakes projects in several sectors, including:

▪️ Petrochemical plants.

▪️ Oil and gas refineries.

▪️ Power generation facilities.

▪️ Fertiliser plants, particularly ammonia projects.

▪️ Infrastructure developments.

The company’s challenge to the decision is expected to place its existing contracts at risk of termination, potentially prompting international legal action seeking compensation for any resulting losses.