Saudi Arabia considering landmark expats self employed ruling

Saudi Arabia is said to be considering landmark changes plans to allow foreign workers to become self employed, or set up their own businesses in the kingdom, in return for paying taxes.

Under the plans, expats would no longer need a Saudi Arabian sponsor and would instead be able to obtaining a license for their professions in return for taxes of between 15-25%, according to a series of reports in the Saudi local press.

According to Saudi daily Al-Eqtisadiah, the Saudi government is reportedly studying procedures to impose two types of tax for those with self employed status, either based on financial statements of revenue, expenditure and profit or by estimated profits for their profession, the reports said.

The second rate would apply for sectors where profit could not be easily verified and will range from a reported 15% for contractors to 25% for consultants, according to the publication.

Concealed activities

Last month the country’s minister of commerce Majid Al-Qassabi said it was developing a study into solutions for concealed commercial activities, in which expats work in the name of Saudis, such as allowing foreigners to invest within regulations by paying tax.

An estimated 200,000 cases of ‘tassatur’, as the practice is known, have been discovered in recent years, according to Saudi Gazette, costing the national economy billions of riyals per year

The proposal would form part of the kingdom’s National Transformation Plan 2020 to diversify the economy away from oil and raise find additional sources of revenue.

Fees for dependants

Saudi Arabia has also, as reported, recently introduced new fees for foreign worker dependents and raised rates for private sector firms with foreign staff in its 2017 budget.

Minister of Commerce and Investment Majed Al-Qasabi has said the ministry was making an in-depth study to put an end to the practice of tasattur including allowing the expatriates to practice trade openly against certain taxes. “The expats will no longer need to hide behind a Saudi to practice trade,” he was quoted as saying.

An official source at the General Authority for Small and Medium Enterprises said a study to combat tasattur was complete and that the expatriates would be allowed to do commercial business without the need to do this in the name of a Saudi citizen.

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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