Fees on expatriates - Saudi Gazette

Fees on expatriates

Fees on expatriates

Yousuf Al-Muhaimeed


By Yousuf Al-Muhaimeed
Al-Jazirah





THE general budget for the fiscal year 2020 targets to generate about SR65 billion in revenues annually through fees levied on expatriate workers and their dependents, according to foreign consultancy firms that formulated these plans.

The imposition of the fees on dependents will start by the middle of this year and the fees imposed on every expatriate worker will go up to SR400 a month from early next year and will culminate in SR800 a month after three years.

The projected revenues from these fees will begin with SR1 billion this year, will go up to SR24 billion next year and to SR44 billion in the year after and so forth.

This theoretical presentation seems logical considering the current number of expatriates in the country. But a valid question rises here: Will the number of the expatriates remain the same in the coming years?

Will the businessmen and industrialists just sit aside and watch what is going on without doing anything?

Are they going to retain all their expatriate workers by paying the fees or will they gradually retrench workers to cut costs?

This is exactly what is happening these days. Many companies have already started reducing the number of their expatriate workers. They did this either through reducing their production or closing some factories that make little or marginal profits.

Therefore the supposition that SR65 billion could be collected annually after three years from fees imposed on expatriates is fictitious because it is based on the present number of the expatriates in the Saudi labor market. This number is something that cannot be guaranteed.

The same applies to the fees on the dependents of expatriates. Many of them may decide to keep their families back home to avoid paying the hefty fees. This also undermines the accuracy of the projected revenues from fees to be collected from expatriates for their dependents.

The matter that raises more questions is the possible reaction of Saudi businessmen and industrialists regarding these measures.

They have two options: relieve their workers gradually and reduce their commercial activities, which is definitely going to hurt the economy, or hike the prices of goods and services.

At the end of the day, it will be the citizen, and no one else, who will be indirectly bearing the consequences of the fees imposed on expatriates and their families. This is the expected result and exactly this was what happened in many other countries that resorted to heavy taxation to raise revenues.

It will be the poor consumer who will at the end bear the fees to be imposed on merchants. The citizen is a small wall over which anyone can jump.

The natural outcome of this will be economic recession, which is likely to hit a number of manufacturing and service sectors because of people's purchasing power will be greatly diminished.

All these possibilities should be taken into account when imposing fees on expatriate workers and their dependents. It is therefore significant that these fees be reviewed if we want to go forward toward more development and prosperity.