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Saudi Arabia imposes tax on expats and their dependents

JEDDAH: Starting July, Saudi Arabia is expected to collect a new levy from expatriates and their dependents in a move seen to augment state revenues.

The monthly levy will be SR100 per dependent in the first year. The amount will be raised gradually every year until 2020. It will double to SR200 after a year, then increase to SR300 in July 2019 and SR400 in 2020.

The Council of Ministers approved the new fees as part of the Fiscal Balance Program adopted in December 2016.

Though the July 1 deadline for collecting the fee is close by, no mechanism for this has been officially announced yet by the pertinent authorities, sources told Al-Riyadh newspaper.

 

Unnamed Passport Department sources revealed early this year the fee would be linked to the residency permits (muqeem identity cards) and collected in lump sum at the time of their renewal every year.

The Saudi government is also planning to raise the fees on expatriate workers in the Kingdom next year.

Minister of Finance Muhammad Al-Jadaan confirmed recently that there would be an increase in the fees levied on expatriates.

The government is committed to its goal of achieving a balance between revenues and expenditure by 2020, Reuters news agency quoted Al-Jadaan as saying.

Companies where the number of non-Saudi employees exceeds the Saudis currently pay a monthly fee of SR200 for every foreign employee. Starting next year, the fee will be increased gradually until 2020.

And for companies where foreign workers do not exceed the number of Saudi staff, the fee will no longer be waived, but will be imposed at a lower rate.

The fee will be imposed on expatriate workers who are more than the number of Saudi workers in 2018 in all sectors. The fee will be at the rate of SR400 per month per expatriate worker. The monthly amount will double in 2020 to SR800.

If the number of expatriate workers is equal to or less than the number of Saudis, the fee will be SR300 per month. The amount will double next year and it will be raised to SR700 per month in 2020.

 

As the official confirmation on the exact mechanism of collecting the fee is still awaited, contradictory messages on social media have added to the confusion in the expatriate community.

Private companies and institutions have started advising their workers about the new government fees. Many companies have warned their employees that the levy would be deducted from salaries.

Meanwhile, a senior Indian Embassy official was quoted as saying that the proposed levy had not been driving Indian expatriates to send back their families home.

His comments came in response to Indian media reports, which said many Indians were planning to send their dependents home because of the new levy.

Speaking to Arabian Business, the embassy official, who asked not to be named, said they did not witness any surge in requests for transfer certificates by parents in any of the 10 Indian schools under the embassy’s supervision.

“The best way to gauge movement of families is through our schools. We have nearly 55,000 students in 10 schools and we haven’t seen any large increase in transfer certificate requests,” he said.

There are about 3 million Indians living in Saudi Arabia, of whom 70 percent are blue-collar workers.

“Though they are concerned with the levy, we don’t see panic among the 55,000 Indian families here,” the official said. [Saudigazette.com.sa]

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