Expats to be allowed to practice own trade

Expats to be allowed to practice own trade

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Ministry of Commerce and Investment

RIYADH — The government is currently considering to allow expatriates to invest in free trade against an annual income tax of about 20 percent, business daily Al-Eqtisadiah reported on Sunday.

A number of transactions were limited to the Saudis, which gave rise to the phenomenon of tasattur (doing business in the name of Saudis against certain fees) that has caused the national economy to lose billions of riyals.

According to informed sources, the concerned authorities are currently conducting studies to impose two types of tax on the expatriates. The first one will be on the accounts the expatriates may present including revenues, expenditure and profits.

The second will be on the estimated profits in case no dividends are announced. In his case, the tax will be fixed according to the area of activity. It will be 15 percent on the sector of contracting and about 25 percent on consultancy services.

According to the sources, the new procedures will enable the expatriate to be his own sponsor without the need for a Saudi kafeel (sponsor) after obtaining the license to invest in any free trade area such as workshops, catering, contracting and others.

Minister of Commerce and Investment Majed Al-Qasabi has said the ministry was making an in-depth study to put an end to the practice of tasattur including allowing the expatriates to practice trade openly against certain taxes. “The expats will no longer need to hide behind a Saudi to practice trade,” he was quoted as saying.

An official source at the General Authority for Small and Medium Enterprises said a study to combat tasattur was completed. He said the expatriates would be allowed to do commercial business without the need to do this in the name of a Saudi citizen.

He said there was complete coordination with the concerned authorities to issue the rules and regulations that would guarantee the rights of the investor whether being Saudi or non-Saudi. “The study will soon see the light,” he added.

According to market sources, about 200,000 cases of tasattur were discovered in the Kingdom over the years including 86,000 in the contracting and 84 in retail sectors. They said the ministry last year alone referred about 450 tasattur cases to the Bureau of Investigation and Public Prosecution.

11 COMMENTS

  1. First of all I want to welcome it in straight way. But we need some clarifications about the sectors to be invested like Clinic, Hospitals, Garments, Agriculture Farms, Pharmaceutical industries, school-college-universities etc.
    The proposed Tax Rate is probably very high !! The Kafala System must be abolished to fulfill the VISION 2030.

  2. This is a very good move though it is late but not too late.
    However,the rules and regulations must be framed in a “investor friendly” way which will attract the foreign investors,instead of imposing ‘mecedes engine in corolla car’,this should never will work.
    Grocery shop dest not require SR millions so the ministry must understand that an investor will invest what is required to be invested which the investor knows better.
    90% of the investors who came in to the kingdom under SAGIA have left because of requirement of mercedes engine in Hyundai i10 car.
    I am hopeful that the commerce minister is wise enough and resolve those issues.
    Thank you

  3. Firstly it says, its being considered, next step would be to formulate a proposal, then discussions in Shoura council, once approved: further to be approved by the cabinet.
    This time it will not be a fixed investment amount, its like if you need to run a business you need to pay 15-30% tax, that would be an earning for the government, as the govt, does not tax a saudi citizen, but a su see most of the businesses are run by expats in the same of the saudi sponsors, so they just want to take the middle man out.
    It will definitely be a good source of income, but there is no clear guideline, as to how can one open a business, does he need to be in the kingdom for that or can any one can start a business remotely.
    So friends this proposal needs at least a couple of years to be implemented on a pilot basis..

  4. Bismillah,

    Firstly, all praise and thanks to Allah SWT who has shown us some light of hope through this news.
    Secondly, thanks to the Ministry for considering and looking into this matter and coming up with a solution for tasattur and considering allowing the expats to invest.
    Thirdly, dear co expats why do we always have to have a pessimistic outlook whenever such news is revealed? I have always noticed that people make more pessimistic comments than optimistic! Half of the issues in any society is having a pessimist approach to everything, “where your focus goes energy flows”. To have positivety in life we need to be optimistic and have good hopes from Allah SWT, because ultimately it’s He who brings about the change and effect. If we hope good then He blesses us with good, if we hope bad then that’s what comes about. Seriously we all need to mature up and go higher beyond just pessimistic comments for it is Allah SWT who has the power over all things. Instead of giving such negative comments, be happy and thankful for every little sign of light, for Allah loves those who are grateful and He blesses them more. Make du’a and keep your hopes high with Him, and not people! I have full confidence in the power of Allah SWT that He’ll bring something very good out of this.

  5. We as expatriates should wait and see patiently the outcome. Having said that is is rather a very heroic move indeed if the Government is implementing it.
    In one way or another expatriate will be able to contribute to the Saudi economy directly by paying a reasonable amount of tax to the Government coffer. This not only helps the Government to generate cash flow but rather will open an opportunity to the locals to compete.
    If we see a different part of the world in U.K, for instance, you will find small and medium enterprises dominated by foreigners but at the same time with the cycle of the economic situation, it is benefiting the locals as well.
    We encourage Saudis and expatriates side by side to work together for the bright future of this country. I swear in Allah not only that if the Government of Saudi Arabia today asked from Muslim expatriates to defend this country we will see thousands of Muslims willingly respond to this request. May Allah always bless this country.

  6. Please explain what is the procedure to get the license from the Ministry of Commerce & investment for Expats to be allowed to practice own trade
    Thank You.

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