Saudi expat levy begins in confusion

Saudi Arabia’s plans to collect a new levy from expatriates and their dependents officially began on July 1, although no ‘mechanism for collection’ has been properly implemented, according to local reports.

As reported, the monthly levy will be SR100 (US$27, £21) 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 Saudi Council of Ministers approved the new fees as part of the Fiscal Balance Program adopted at the end of December 2016.

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

According to local reports, unnamed passport department sources revealed that the fee could 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 has also said that it is planning to raise the fees that companies paid to be allowed to use expatriate workers in the Kingdom next year, with plans to collect the fees direct via salaries mooted. Fees are also payable by the companies themselves.

Fees for foreign employees

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.

Flucutuating oil prices

The move has been introduced to boost the government’s coffers after several years of low and fluctuating oil prices – will be SAR100 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.

Amnesty campaign

As reported, hundreds of thousands of  expats have already left Saudi Arabia under the recent amnesty campaign, which is currently underway, according to kingdom officials.

The three-month long campaign, which finished at the end of June, allowed those individuals that are currently in Saudi without the right visas and documents to leave the country, without facing fines or penalties for violating the rules.

Those leaving under amnesty are also allowed to be exempt from the ‘exit fingerprint’ requirement, and can return to the kingdom at a later date legally, without an retribution for breaking the law, according to local reports.”

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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