Saudi Arabia’s 10.4m expats set to face restrictions on money moved abroad
Saudi Arabia is aiming to introduce a new cap and monitoring system on the amount of money that it 10.4m expats send abroad.
Authorities in Saudi Arabia are said to be considering plans to introduce a new system that will compare remittances to a sender’s income and potentially restrict outflows from the country should the amounts of cash being exceeding the amount of earnings of the individual.
Saudi national newspaper Arab News reported that the controversial cash restriction project is the brainchild of the country’s Finance Ministry, the Saudi Arabian Monetary Agency and other bodies, according to a source that the newspaper spoke to.
The new mechanism could potentially impact millions of expats who live and work in the kingdom, by taking control of remittances in the country, after authorities are understood to have detected that thousands of foreign workers transfer amounts that exceed their income.
Sources close to the policymakers told the Arab News that the move was set to be implemented due to concerns that this could be a sign of concealed or criminal actions.
There is no set date for the new legislation but it is understood to be launched soon and is designed to limit labour market irregularities and violations that increase the incomes of expatriates.
Any income obtained by foreign workers could be monitored through links with banks through a unified network system.
Saudi Arabia’s Department of Statistics estimated that the country’s population totaled 31.52m in 2015, of which around 10.4m were expats.
Numerous Gulf countries have considered a tax on remittances to boost public coffers, although the United Arab Emirates decided against any income tax on exit income recently.
Saudi Arabia has been going through a major transformation in recent times. As reported in June, it outlined its National Transformation Plan, as it looks to reduce its dependency on oil revenues and diversify its economy.
Among the moves outlined in the 112-page Vision 2030 document includes plans to cut state spending on salaries and details a bold move away from its economic reliance on hydrocarbons.
The National Transformation Plan, published online here, also includes a bid to balance the budget by 2020, with debt rising from 7.7% currently up to 30% in 2020.
The move to restrict expats cash outflows perhaps flies in the face of recent moves by the country to welcome more and more foreigners into the region.
Earlier this year, as reported, new measures were introduced in Saudi Arabia to simplify and speed up the visa application process for foreign companies and entrepreneurs. Also, at the end of April, as reported, the country announced surprise moves to allow more tourists into the region.