1. Saudi imposes family tax: Here is how it will hit Indians hard

Saudi imposes family tax: Here is how it will hit Indians hard

In 2017 itself, each dependent of expats will incur a monthly fee of Saudi Riyal (SR) 100 (about Rs 1700) from July onwards, which will increase every year until 2020.

By: | Published: June 21, 2017 2:28 PM
United Arab Emirates, Qatar, Qatari passport, Gulf state Qatar, Saudi King Salman, Donald Trump, Islamist groups, Islamic State militant group From next year, the levy on expat workers will be gradually revised upwards, providing an additional impetus for employers to hire more Saudis.

Expats, including Indians, living in Saudi Arabia seem to be a worried lot today. After all, the Saudi government’s plan to introduce an ‘expat levy’ from July 2017, with charges of up to SR800 per worker to be phased in by 2020, is going to cost them heavily, which many of them may be unable to bear. In 2017 itself, each dependent of expats will incur a monthly fee of Saudi Riyal (SR) 100 (about Rs 1700) from July onwards, which will increase every year until 2020. The levy on expat workers will also be gradually revised upwards from next year, providing an additional impetus for employers to hire more Saudis.

“When Saudi Arabia borrowed (first time in the recent history) for their annual budget last year, one thing was clear — All is not well with this oil producing country which not only survived but thrived steadily with the boom in oil prices until 2014. After the US companies started production of Shale oil, the crude oil prices have nosedived and are hovering near USD45 per barrel,” says Atul Surana, Certified Financial Planner, Catalyst Financial Planning.

Experts say that the fortune of the Saudi government is shrinking with the falling crude oil prices. As the saying goes – ‘Adversity is the mother of wisdom,’ the Saudi government is inventing a way out of this misfortune. “The plan to introduce an ‘expat levy’ from 2017 was confirmed during the recent budget announcement, with charges of up to SR800 per worker to be phased in by 2020. Companies currently pay a levy of SR200 per month per expat employee, but only for expat employees that exceed the number of Saudi employees. But that will be gradually increased from next year, the government’s “Fiscal Balance Program – Balanced Budget 2020” document shows,” says Surana.

From next year, the levy on expat workers will be gradually revised upwards, providing an additional impetus for employers to hire more Saudis. For companies in which expats 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. A fee on dependents of expatriate workers will also be levied. It will commence in July of 2017, in order to minimize the impact on families with children enrolled in school. Currently, neither Saudi nationals nor foreign laborers pay income taxes, and this policy will remain in place, the government says.

Here is what the new expat levy will cost:

In 2017

• Dependents of expats will each incur a monthly fee of SR100, from July onwards.

In 2018

• Dependents of expats will each incur a monthly fee of SR200, from July onwards.

• In companies where the number of foreign employees is equal to or lower than the number of Saudis, a monthly fee of SR300 will apply from January onwards.

• In companies where the number of foreign employees exceeds the number of Saudis, a monthly fee of SR400 will apply from January onwards.

In 2019

• Dependents of expats will each incur a monthly fee of SR300, from July onwards.

• In companies where the number of foreign employees is equal to or lower than the number of Saudis, a monthly fee of SR500 will apply from January onwards.

• In companies where the number of foreign employees exceeds the number of Saudis, a monthly fee of SR600 will apply from January onwards.

In 2020

• Dependents of expats will each incur a monthly fee of SR400, from July onwards.

• In companies where the number of foreign employees is equal to or lower than the number of Saudis, a monthly fee of SR700 will apply from January onwards.

• In companies where the number of foreign employees exceeds the number of Saudis, a monthly fee of SR800 will apply from January onwards.

No income tax

• Saudi Finance Minister Mohammed Al-Jadaan told reporters in Riyadh that these fees do not apply to domestic helpers, such as drivers and cleaners, but only to expats working in commercial entities.

• “There are two kinds of fees, the first is according to the number of family members an expat has in return for utilities used… this minimal amount will increase gradually every year,” the minister said in response to a question from Arab News.

• “The second is already imposed on companies which employ expat workers; this will increase gradually as well until 2020.”

• The finance minister ruled out income taxes on Saudi nationals, foreigners or company revenues.

(With inputs from arabnews.com)

  1. Shahid Ullah
    Jun 21, 2017 at 3:10 pm
    Disturbing situation. Indians went to earn taxless ries n save . MANY families depend upon remittance sent by THEIR KIN. Lacs Will b jobless by 2020..
    Reply

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