New fees on expats a ‘burden’ on pvt. sector

New fees on expats a ‘burden’ on pvt. sector

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Member of the Riyadh Chamber of Commerce and Industry Abdullah Al-Maghlouth
Member of the Riyadh Chamber of Commerce and Industry
Abdullah Al-Maghlouth

TABUK — The new fees to be imposed on expatriates and their dependents from July 2017 will constitute a financial burden not only on them and their families but also on their employers, a member of the Riyadh Chamber of Commerce and Industry has warned.

Abdullah Al-Maghlouth, member of the chamber’s investment and securities committee, expects the fees to reach SR65 billion by 2020 but said they would have adverse effect on the work environment in the Kingdom.

“The fees will have an adverse effect on the private sector including the contractors, the building material, the food and consumer products and will increase prices. The citizen will be harmed. This will also harm the attractiveness of the work environment in the Kingdom,” the official was quoted by Al-Watan as saying.

Maghlouth called for finding mechanisms to alleviate the harm and said this could be reached through nationalization of jobs.

He also warned that the fees would have a negative impact on the real estate market as many of the expatriates may opt to leave the country with their families.

“A number of offices, shops and flats will be vacated. The landlords and the realtors will suffer in this case,” he said.

Maghlouth called for enabling the expats to invest part of their salaries in special funds and to encourage them to spend part of their incomes inside the country through special mechanisms other than imposing fees on them.

He said the expatriates have accumulated experiences and if they leave the country, the private sector will suffer.

Maghlouthm, however, said there are excessive random foreign labor which the country does not need. “They constitute a burden on the Saudi economy and compete with the citizens in the available openings,” he added.

He said these excessive workers would be willing to pay the fees only to stay in the Kingdom while the country actually does not need them as they work under tasattur.

“We have to decide whom we want and whom we do not want. We also have to provide the private sector with other alternatives without putting extra burden on it,” he said.

83 COMMENTS

  1. “many of the expatriates may opt to leave the country with their families”
    unless they were deported by force, millions of arab and asian expats will never leave the kingdom where they earn lucrative income.

    • it is just your wrong thought. Why should one not leave when they can start their own business in their home country against the same amount which will be imposed as fees ?? For example, 6 family members monthly fees will be 400 SR per person by 2020. So, 400 X 6 family members X 12 months = 28800 SR yearly. It is almost 0.8 million Pakistan rupees and any small business can be started in that amount very easily. Dr. Ashraf Ali, you must study the case in different angles before you comment.

    • Dr. Ashraf, I am not sure if what you said is fully true. Yes Expats are planning to send their families back home and they remain to stay here. Honestly I personally feel that many of expats are already making something ready as a platform in their home countries to go back and launch themselves in their respective countries. I am not sure what lucrative income means which is far from reality. I am certainly sure that in health sector expat doctors are well paid where other countries don’t pay the same for a doctor without specialization. Certainly lucrative applies in such cases… Nevertheless I fully agree as per the author of this article where in he states that this shall indirectly burden citizens and as well expats. Let’s wait and see how expensive the living costs can be in 2017. All the best

    • Sponsors have started deducting the “Fees” from Expat Salaries, which goes against their contract. This is done at the small labor force i.e. carpenters, car mechanics, masons and plumbers. Their salary is already very low SAR 1200/month and deducting SAR 400/month will force them to leave the country and find job somewhere else in GCC / Asia / Europe.

      Will the nationals work as Plumbers, Carpenters, Baladia, Car Mechanics ; if yes then this is good for the country’s economy , otherwise there will be a Market Crash with Zimbawean inflation.

    • They earn because they work. Why you don’t convince your citizens to do job?
      And for your information,
      Saudis can’t live if they don’t have double salaries than the expats.

  2. Other nationalities are more abusive than the Saudi Nationals. They are afraid to lose their job and always saying bad words..

  3. Totally I agree that this kind fee on expatsome family will have negative impact and private sector expat worker hard work this country has developed to compete in world in any format. If the government like to put fee is not good idea…

    • The amount of the fees might be a bit extravagant, especially to those with low paying jobs, however imposing a flat fee is not all that bad, taking into account the income level of each particular worker. Let us not forget that Saudi Arabia is among the few countries that doesn’t impose income, or sales tax whatsoever.

      • Mohammed Majed Alsharief “Saudi Arabia is among the few countries that doesn’t impose income, or sales tax whatsoever.”

        but also they didn’t plan anything in return like education medical support and many things which other countries who are taking tax provides.

    • Mr iftekhar said very right.Expats are not here for love sake with saudies.they will leave the country if they feel facing huge amount deduction from their earnings and difficult to meet ends of income n expenses.I see the counter productives results on economy, instead.
      I suggest,government should review their reforms policy.

  4. Correct analysis. I am also planning to send back my family to Pakistan and all my friends also planning the same as it will be almost impossible to keep our families in the kingdom after imposition of extra taxes. The government should constitute a mechanism for the proposed tax based on the income of the employees. It is not fair that an employee with an income of SR 2000 pays the same tax as an employee with an income of SR 100000.

  5. Mr. Dr.

    Your income may be lucrative but not all the expats are earning as much as you do. As stated by writer yes expatriates may opt to leave the country with their families because we cannot afford this fee. I am one of the example as I am thinking of leaving the country now seriously.

  6. It is only one sided. This is a well thought step that must have been discussed in great details. Yes some expats may leave, SO. Their positions will be filled by either many job less Saudi citizens or by other expats or these positions may not be filled at all. The country is going through a transformation, we need to wait till it all ends.

    • I think the point of the writer is about the kingdom generating income by imposing those fees. If the place saudi nationals would you think the government will generatw that amount of income? The buying power of expats will be low because less people means less needs that includes housing, transportation, food and other necessities. Come and think of it.

  7. I already have sent back permanently 3 families of my brother in laws. They have reached back in Pakistan and they will do their OWN small business and they can do it with the amount of fees which will be imposed on them. So, why should one pay huge amount here and why not do your own work in your home country ?? Fees is not small amount for 6 members family. Agreed with writer that it will effect real state sector badly.

  8. There will be huge losses, expat will sent their families back home. Apartments will be empty and no one will occupy, no admission in schools and shopping center will be empty..

  9. If government is taking this tax . They should provide free medical and education facilities. Otherwise people will definitely think to go back their home countries with families. If government don’t need more expat in Kingdom so why they are issuing working visas and family visas.

  10. Ksa should think abt how expats will spend here. Rather if expats send their families back whatever savings due to tax is calculated will be lost and also the spendings which expat families make in kingdom which adds to the economy of the country. Please think abt ways to create businesses and free zones which will help the economy since many expats will want to set businesses here and so the money will remain in kingdom and add to economy rather than make the expat send away their families whatever they are adding to the economy will be lost which is much greater than what the expat dependent fees will collect also many Saudis will lose their income which come when expats rent the houses,when they spend on education,when they shop.

  11. Finally, we have someone to speak the voice of thousands of expats. Hope the government takes this into serious consideration and make some alternate ways to come out of this debt. Insha Allah!

  12. Well said.. If the expat families leave the kingdom, then it will effect on real estate and the food and consumer products.

  13. Yes I agree with the writer,
    f the expat families leave the kingdom, then it will effect on real estate and the food and consumer products.

  14. Good analysis. Many will leave in couple of months and they will send the money back to home country instead of utilising very high rates of living here.

  15. I feel if the conditions are made easy for the expats, they will invest more money here, like make it easy for them to do business, allow them to do investments here etc.. so that they can invest more money here rather than remit back home. Such ideas of imposing fees will have opposite effect with expats sending back their families so the revenue that was being generated thru them with the house rents, school fees, exit-reentry, and daily expenses on food, clothing etc will come down drastically.. in the end will be a loss for the Govt.

  16. As per my point of view, if people (Expats) leave the Kingdom of Saudi Arabia then there are others who are hunting for jobs and waiting for companies to hire. Think for a change and create better future.

  17. The author has raised extremely valid points! The real estate market will be affected very badly. Even now there are so many buildings that don’t have occupants and landlords are facing losses. With this fees imposed more expat families will leave the country and badly affect real estate as no one will lease apartments and houses. Also this fees will give an extremely bad reputation to the kingdom in the international community. This tax is also unislamic. No country in the world treats expats like this in this world. Injustice like this will never bring prosperity for Kingdom as humans can plan and plot but Allah has his own plan and surely his plan is the best.

    • At least the expats will not suffer from a decline in the real estate market. In reality, lower rents could actually help those who remain!

  18. I appreciate this article which is true analysis the conditions of now days really it will affect the market I study real estate is the bone of structure of country if this structure fell down means growth will stops I think this tax or fees impose to expat not good for future I survey market almost all business are affected only this rules come still not started coming months bad affect comes in the market. Thank you

  19. I think the analysis made by the writer is exactly the way is gonna happen. This is indirectly reducing income to citizens. As our families are here we are spending the money as per the requirement. Once we send our families back home we will be sending the same amount back home, it will improve our country’s economy. As the flow of people is less then commercial market will be no more. It is direct impact to the private business (holding by citizens). Although I am not economist however this is common man analysis.

  20. Impressive Analysis.👍
    I personally think if expats send their families back to their home countries then they must have to send all their earnings to theirs countries.
    And if they stay here with families they will spend here.
    So these type of burden on expats is also not good for the Kingdom.

  21. This will affect for all the cost of living for sure like for example the tailor who always I requested to cut my pants from 5 Sr they start to ask now 20 Sr so if they need to survive in this coming year they will increase their fees for survival, anyway inshallah I’m sending my family back home next month good luck for all of us who will stay in the kingdom…

  22. I agree. First year will not make that much difference but as time passes & fees is increased as forecasted, expats will start to have second thoughts. I, before my family came here used to spend 500 – 700 a month. Now my expense is 3500 – 4500. If they go back, I’ll return to my old spending. I’ll save money but Saudi economy will lose. Think again policy makers.

  23. It is a very common and crystal picture what the writer of the article mentioned here. I was puzzled by the economists who they firstly initiated this idea to enable Saudi Arabia to shrink it’s budget deficit. As an expatriate, I met some of my expatriate friends whom I knew and every one of them is intending to send their family members back to their respective countries. As the writer emphasized here this law will directly affect the business community of Saudi Arabia as a whole. The price of commodities will go up because businesses will add a percentage of the amount to balance the loss they will incur from this payments. Not only that the relationship between employers and employees might be hard as some employers will force the employee to pay his monthly payment towards the government by deducting his monthly salary this will compel the expatriate working force to leave the country for good.
    This is not a good sign of the future Saudi Arabia especially by the time where the country seems to promote FDI ( Foreign Direct Investment), this will deter and will make the foreign investor think twice before investing in this country.

  24. There are several ways to increase the revenue of the Kingdom such as to issue the more family visa for expat working here. More is the public–>more is the needs –>more shopping–>need more family dwellings–>more school and associated expanses–>and so on.

  25. If saudi government provide the free educational and medical facilities, then this fee is not an issue.
    Otherwise mostly expatriates will send their families to their homelands soon.

  26. I agreed to pay tax or fees in Canada and get my Canadian citizenship in return of the payment. What KSA can give me if I pay tax or fees here? Nothing ! European countries are open to give citizenship..

  27. Expats will pay fee on dependent which are more than 18 year old. Less than 18 year old dependent are not subject to any types of taxes.

  28. I agreed with the writer that it will harm the citizens whose flat and shops are rented by expats. After this announcement a number of people are heard as saying that they were planning to go back or keeping their families in their home country.

    If expats live in kingdom without this extra burden on their pockets it can boost the economy as they spend money here while living with their families. I guess after first year of implementation expats will make their exits fast.

  29. Although expats and nationals are worried of this so called new implementations, I am wondering to know even if some expats do agree to pay the tax or whatsoever called, would there be some plan of facilities for expats ?

  30. If saudi government provide the free educational and medical facilities, then this fee is not an issue.
    Otherwise mostly expatriates will send their families to their homelands soon.

  31. I don’t think there will be any adverse effects on Kingdom economy. This is a very calculated step in broader exposure, the expatriate must have to decide either to participate or see what maximum suitable for them.
    There will be no effects at all even 90 % of the present expatriates families leaves the Kingdom now.

  32. Actually it will effect more because many expats will send their families and they will be staying here which means this fee will have a negative impact. Expats will start sending most of there income outside Kingdom. Instead they should think of ways so that the money stays here. Its also like they want expats to live here without there families. Taxes in other countries are for everyone not just for expats.

  33. Perhaps if saudi government can give exemption to expats settled in saudi arabia…..as the families of this expats will behave as a expat in there own country…..bcoz they are deeply accustomed to the lifestyle of saudi arabia….may Allah bless and guide us all…

  34. Blessings of Allah on brother Abdullah Al-Maghlouth (Member of the Riyadh Chamber of Commerce and Industry), who analysed perfectly in this issue and gave good suggestion to the government. The government to rescind all such fees which are to be imposed on expatriates from the mid-2017.

    SURE, “The fees will have an adverse effect on the private sector including the contractors, the building material, the food and consumer products and will increase prices. The citizen will be harmed. This will also harm the attractiveness of the work environment in the Kingdom”.

    “A number of offices, shops and flats will be vacated. The landlords, real-estate and the private sector will suffer much in this case”.

    All we request to KSA government to rescind such fees which are to impose on expatriates from the mid-2017.

    May Allah bless and guide us all in this pitiable situation.

  35. I am of the considered that the expatriates are divided in number of classes.
    1) Earning SAR 5000 p.m. will have no option to return back with their families leaving behind the vacant flat.
    2) Salaried persons will also go because their kids are studying in abroad.
    3)Policies are blowing hot and cold at the same time. 3) There is only one way to stop the remittances i) allow the expatriates to purchase land/houses. ii) Allow the expatriates to invest in the open market. iii) Kafeel system is an fabricated approach which is liable to be stopped.

  36. It is good to increase fees and they should implement more so that we will start not only thinking but will go to our homeland to do even a small business there and have a meaningful life.

  37. I 100% agree with Mr.Abdullah Al Maghlouth, wht he saying its the positive and progressive thoughts. this fees would be a huge burden on expatriate, specially who have the small scale salaries their dependents must have to leave this kingdom.just bcz they cant afford.
    please take back this decision we all request to the ministers of the kingdom.
    Thanks

  38. Whatever people say about Saudis but they are the best from my heart; they supported many underdeveloped countries in the world. I am from Pakistan and i know from my village almost every youngster not want to go anywhere else but only Saudi Arabia, especially to see and work in the holy land.
    I hope that Saudi Arabia boost its non-oil economy while retaining its existing oil economy

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