Senior bankers in Saudi Arabic clarified on Sunday that money sent home by expatriate workers will not be taxed under the value-added tax (VAT) reform initiative to be launched by the Saudi government on Jan. 1 next year.
“Money remittance outflows will be exempted,” Arab News quoted Abdullah Ali Nasser Alfuraiji, chief of the Tahweel Al-Rajhi as having said.
Alfuraiji made it clear that “the 5 percent VAT tax would be levied on the remittance service fees, rather than the remittances themselves.
He emphasized that “Tahweel will be charging 5 percent of SR18, which we charge as remittance fee for sending funds to India. Hence, the rise will be nominal with customers required to pay 9 halalas extra for remitting money to India.”
The Tahweel chief added that this will be negligible, but will differ from country to country.
Referring to the implementation of the VAT and the levies imposed on remittances, Ahmed Mohammed Al Enazi, general manager of Enjaz Banking Services, the remittance arm of Bank Albilad, said: “There will not be any impact on remittances.” He also confirmed that “5 percent VAT will be imposed on service charges… say like 5 percent of SR16 in case of India and 5 percent of SR20 in case of Pakistan.”
“The 5 percent on banks’ service fees will be paid by the person sending money as per guidelines of the General Authority of Zakat and Tax (GAZT),” said Ahmed.
Banks and remittance centers in the Kingdom charge varying fees on remittances sent to different Asian and European countries.
The imposition of 5 percent VAT “on service charges, not on remittance amounts” was also confirmed by Anwar Ahmed Wajid Khajja, manager of products and partners at Fawri, the remittance wing of Bank Aljazirah in Riyadh.
Referring to the benefits of VAT especially those collected by banks and remittance centers, Cenon Nonie C. Sagadal Jr., marketing representative of Rizal Commercial Banking Corporation (RCBC) of the Philippines, said: “VAT is a welcome move with a slight increase in remittance fees, which will eventually benefit the remitters and the institutions.
“With the government meeting its financial goals as a result of VAT collection, more employment opportunities will be created not only for Saudis but also for expatriates within the framework of the Saudi Vision 2030.”
It was also announced that companies and businesses have only three days left to register and obtain their dedicated VAT account numbers.
Published on 18 December 2017