Confusion reported as start date of new Saudi expat fee approaches

With a new tax looming for expatriates living in Saudi Arabia just weeks away, confusion is said to exist in the desert kingdom’s expat community about just how the new tax is to be implemented. 

The new fee – which will begin to be implemented on 1 July, and which, as reported, has been brought in to boost the government’s coffers after several years of low and fluctuating oil prices – will be SAR100 (US$27, £21) per dependent per month. It was announced earlier this year, and has been criticised by many in the expatriate business community, who say it will unfairly hit both businesses and families.

The amount is expected to increase every year until 2020, doubling to SAR 200 next year, then rising to SAR300 in 2019 and SAR400 in 2020, according to published reports.

In addition to being aimed at boosting depleted government coffers, the expat fee is also seen as being part of a wider campaign to encourage the hiring of Saudi workers ahead of expatriates. It is not being levied on domestic helpers, such as drivers and cleaners, but only on those expatriates who work in commercial entities.

Confusion

According to local reports, contradictory social media messages about the liability of Saudi expatriate residents who are on dependent visas has added to the confusion about how the levy will be calculated.

Employers have warned workers that they have been instructed to debit the fees direct from their pay packets.

For companies in which expat staffers do not exceed the number of Saudi or GCC employees, the fee will no longer be waived, but will be charged at a discounted rate.

Currently, neither Saudi nationals nor foreign workers pay income taxes, and this policy will remain in place, the government says.

Early sign that expat are leaving: 2nd hand car market

In March, the Saudi Gazette newspaper reported that demand for second-hand cars had “dropped sharply in the local market while the supply [had] increased since mid-2016”, and noted that this was being attributed at least in part to “the proposed levy to be imposed on dependents of foreign workers beginning [in] July”.

The report, which cited as its source an Arabic daily, Makkah,  added that the supply of second-hand cars in the market “was likely to surge further with the expected departure of more expatriates in coming months”.

ABOUT THE AUTHOR
Gary Robinson
Deputy Editor, International Investment and Head of Video at Open Door Media Publishing. A fully qualified journalist and filmmaker with more than 20 years' financial services experience, both as journalist and originally as an IFA.

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