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In-Kingdom Total Value Add (IKTVA) ProgramCreating Value in the KingdomIKTVA workshop - First Time Filers
2 Saudi Aramco: Company General Use
The In-Kingdom Total Value Add (IKTVA) Program
The objective is to drive key activities towards localization and job creation, which will be assessed against the following metrics:
A. Localized goods and services ($)B. Salaries paid to Saudis ($)C. Training & Development of Saudis ($)D. Supplier Development Spend ($)r. Local Research and Development ($)
E. In relation to revenue (spend from Saudi Aramco)
Supplier IKTVA Formula
% IKTVA = 𝑨+𝑩+𝑪+𝑫+𝒓
𝑬∗ 𝟏𝟎𝟎DEFINITION
The IKTVA program drives, measures and monitors the “added-value” brought to the Kingdom by a supplier.
Additional Info.
•Number of Saudi Employees
• Investment ($)
• Exports ($)
• Top OOK Suppliers
• Female Employment
3 Saudi Aramco: Company General Use
IKTVA Survey Worksheet
IKTVA is a Saudi Aramo Strategic Imperative
• 3 years provided to create baseline
• Report both Saudi Aramco and Total KSA (including Saudi Aramco)
4 Saudi Aramco: Company General Use
1. All financial amounts should be reported in USD.
2. Amounts reported should correspond to the company’s fiscal year end.
3. Assumptions and calculation methodologies utilized should be consistent with prior years and with recognized accounting standards.
4. Amounts should not be double counted. For example, if Training Costs are listed, these costs should not also be included in Goods and Services or Payroll.
5. For JVs and subsidiaries, incorporate Parent’s share of operations into their own IKTVA calculation – in general one consolidated submission per parent company
• Talk to us if you have questions or want to submit individually
• Intercompany transactions should be eliminated
6. Reports will be submitted annually
7. Create supporting documentations similar to that used in financial audits.
8. Use the right survey tool
• First time filer survey
• Repeat filers
General Instructions
5 Saudi Aramco: Company General Use
Company Information
IKTVA is a Saudi Aramo Strategic Imperative
Types of G&S
IKTVA Progress
Operating Locations
Affiliates Included
6 Saudi Aramco: Company General Use
Category E – Section 1.0: Revenue
Revenue Ratio$20 mil / $50 mil = 40%
• Includes company-wide revenue including affiliates • IK sourced• OOK sourced
• For partially owned entities of the company, partial credit is given
• Saudi Aramco Revenue:• Includes indirect revenue through agents and EPC revenue• Excludes partially owned subsidiaries and JVs
• Saudi Aramco revenue amounts should be confirmed with Saudi Aramco through [email protected]
Includes revenue from Aramco
7 Saudi Aramco: Company General Use
Category A – Section 2.0 – Goods and Services
Goods & Services ≠ COGS or COS
8 Saudi Aramco: Company General Use
Category A – Section 2.0 – Goods and Services
Goods & Services = IK COGS/COS + SG&A + R&D
9 Saudi Aramco: Company General Use
Category A – Section 2.0 – Goods and Services
Exclude:• Taxes, customs, duties, zakat, withholding taxes, iqama/visa fees• Cost included in other sections• Capital expenditures should be excluded from Section 8.0 Top IK Suppliers
Include:• Selling, marketing, and other administration and other operating cost• Financing charges• Insurance• Expat benefits (if from IK provider)
10 Saudi Aramco: Company General Use
Section 8.0 – Top in-Kingdom Suppliers
IKTVA is a Saudi Aramo Strategic Imperative
> 70%
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Category A – Section 2.0 – Goods and Services
IKTVA is a Saudi Aramo Strategic Imperative
12 Saudi Aramco: Company General Use
Category A – Section 2.0 – Goods and Services
is
13 Saudi Aramco: Company General Use
Category A – Section 2.0 – Goods and Services
IKTVA is a Saudi Aramo Strategic Imperative
Sales Revenue Ratio (40%)
Unless otherwise justifiable, Saudi Aramco Goods & Services can be estimated using a simple ratio.
Challenges:• Inventory fluctuations• Length of supplier table
14 Saudi Aramco: Company General Use
Category B – Section 3.0 - Saudi Payroll
IKTVA is a Saudi Aramo Strategic Imperative
Unless otherwise justifiable, Saudi Aramco headcount and compensation can be estimated using the revenue ratio.
Year End GOSI
Can include Saudi Expat compensation
and headcount
Sales Revenue Ratio (40%)
15 Saudi Aramco: Company General Use
Category C – Section 4.0 - Training & Development
IKTVA is a Saudi Aramo Strategic Imperative
Can include IK and OOK costs if related to T+D of Saudis:• Training fees• Travel and accommodation• Expats and outside consultants costs
16 Saudi Aramco: Company General Use
Category D – Section 5.0 – Supplier Development
IKTVA is a Saudi Aramo Strategic Imperative
• Can include customer training & development costs related to skills/capabilities improvements • Does not include installation, commissioning and other contract required development activities
• Can also include OOK cost
17 Saudi Aramco: Company General Use
Category R- Section 6.0 – Research & Development
Use international accounting standards to determine what qualifies as R&D
Split IK/OOK
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Highlighted in Supplier Profile
Section 7.0- In-Kingdom Investment
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Section 9.0 – Top out of -Kingdom Suppliers
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Section 10.0 – Capital Expenditures
Can be completed going back 10 years at supplier’s option
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Section 11.0 – Asset Depreciation & Amortization
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Section 11.0 – Asset Depreciation & Amortization
10 Years
Section 2.0 Goods, Services, Depreciation and Amortization
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Section 12.0 – Female Employment
24 Saudi Aramco: Company General Use
Baker Tilly MKM & Co. CPA Bader [email protected]: +966 13 830 0906 Cell: +966 50 386 8488
BDO/Dr. Mohamed Al-Amri & CoRick Klauss
Tel: +966 13 834 4311
Cell: +966 50 475 3866
P.O. Box 2590, Dammam 31461
Grant Thornton International /Al Dar
Audit Bureau Abdullah Al Basri & Co
Imad Adileh
Tel: +966 (11) 463 0680
Fax: +966 (11) 464 5939
Mob: +966 59 558 0027
RSM Allied Accountants
Mohammed Al Nader (Riyadh)
[email protected]: +966 (11) 456-2974Tel: +966 (11) 494-0587Mob: :+966 55 228 4828
Aqeel Ahmad (Jeddah) [email protected]:+966 (0)50 4668964T:+966(12)653 4021 Ext 101
Ernst & Young
Haider Khan
Tel: +966 (11) 2159 898 Ext 46476
Mob: +966 59 372 2294
PricewaterhouseCoopers
Farouk Shaikh (Riyadh)
[email protected]: +966 (11) 211 0400 (ext. 1770)Mob: +966 54 717 4510
Ali H Basri (Khobar)[email protected]
Telephone: +966 13 849-6311 (Ext. 3002)Mobile: +966 5 0670-4733
Salman Siddiqui (Jeddah)[email protected]: +966 (2) 610 4400 (ext. 2009) Mobile: +966 544 25 6597
Approved Auditors
25 Saudi Aramco: Company General Use
Thank you
Contact Information
