Saudi Arabia to start collecting expat tax from next month

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Starting next month, Saudi Arabia will be collecting a new tax from expatriates and their dependents, a move that is seen to boost the country’s revenues amid weak oil prices.

As per the details announced last December, there would be two kinds of taxes:

  • Fee on dependents of expatriates, and
  • Fee on companies employing expatriates

Fee on dependents of expatriates

The fee on dependents of expatriate workers will be levied from July of 2017, in order to minimize impact on families with children enrolled in school.

  • From July 2017, dependents of expats will each incur a monthly fee of SR100
  • From July 2018, dependents of expats will each incur a monthly fee of SR200
  • From July 2019, dependents of expats will each incur a monthly fee of SR300
  • From July 2020, dependents of expats will each incur a monthly fee of SR400

Fee on companies employing expatriates

Companies in Saudi Arabia currently pay a levy of SR200 per month per expat employee, but only for expat employees that exceed the number of Saudi employees.

  • From next year, the levy on expat workers will be gradually revised upwards, providing an additional impetus for employers to hire more Saudis
  • 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 2018 onwards
  • In companies where the number of foreign employees exceeds the number of Saudis, a monthly fee of SR400 will apply from January 2018 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 2019 onwards
  • In companies where the number of foreign employees exceeds the number of Saudis, a monthly fee of SR600 will apply from January 2019 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 2020 onwards
  • In companies where the number of foreign employees exceeds the number of Saudis, a monthly fee of SR800 will apply from January 2020 onwards

The move aims to ensure that more Saudi nationals get jobs in comparison to their expat counterparts.

As per latest reports, many companies are planning to deduct the levy from their employees’ salaries. Private companies and institutions have already started talking to their workers about the government levy.

According to Mohammed Al-Jadaan, the Saudi Minister of Finance, these levy fees will not apply to domestic workers like cleaners and drivers. The new expat levy is applicable to the foreign worker in commercial sectors.

“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 second is already imposed on companies which employ expat workers; this will increase gradually as well until 2020,” Arab News reported the minister as having said.

According to the report, the Minister emphasized that there would be no income taxes levied to the local workers, expats or company revenues.

Published on 11 June 2017

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