No tax on expat remittances

No tax on expat remittances

Expat dependents’ fee to bring SR2.674bn to state coffers annually

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No tax on expat remittances

Jeddah —There are no plans at present to impose any taxes on remittances by expat workers, Mohammed Al-Tuwaijri, secretary general of the Financial Committee at the Royal Court, was quoted as saying by Al-Madina Arabic daily on Saturday.

The Shoura Council is discussing plans to impose a 2 to 6 percent tax on expat workers’ remittances.

Former Shoura Council member Husam Al-Angari, who submitted the proposal, suggested a 6 percent tax in the first year of living in the Kingdom.

He said the tax would then drop to 2 percent following five years of the expat’s residency in Saudi Arabia.

Al Angari was quoted as saying that expats’ remittances had almost tripled since 2004, having increased from $15.1 billion(SR57 billion) to over $36 billion (SR135 billion) in 2013. The World Bank claims Saudi Arabia accounts for the second highest volume of remittances after the US, with $37 billion in 2015.

The Kingdom first mooted a tax on expat remittances in June. At around the same time, the UAE was also reported to be considering the imposition of such a tax.

Meanwhile, Minister of Finance Mohammed Al-Jadaan said that the details on the exemption of nationalities from expat dependents’ fees will be announced later.

Social, political and security circumstances will be taken into consideration to decide on the nationalities to be exempted from such fees, he said in response to a question about the possibility to exempt Yemenis, Burmese and Syrians from the proposed expat dependents’ fees.

There is a provision in the budget 2017 to levy fees on each dependent of an expat worker.

The proposed expat dependents’ fee will bring SR2.674 billion to state coffers annually from the first year of its implementation, according to estimates.

There are 11,660,998 expatriates and their dependents in the Kingdom, according to data.

The number of expat dependents under 19 years of age in 2016 was 2,228,525. The monthly fees that will be collected for these dependents will be around SR222,852,500 per month.

In the first year of its implementation in 2017, an expat worker will have to pay SR100 for each of his dependent every month.

In 2018, the fee will increase to SR300-SR400 per dependent per month. This will rise annually to reach SR800 per month per dependent by 2020.

71 COMMENTS

  1. Salaam,

    Why tax dependents? Isn’t that against Islam? Taxing for no reason. Most of the expat dependents are children who COST the expat money already. Non Saudis cannot attend public schools (cost to the expat), Iqama’s (cost to the expat), travel home each year (cost to the expat). I know that I did not have to pay taxes as a US citizen because I made less than USD $80,000/year, but some countries (Canada, I believe) tax their workers income for working outside Canada. I do understand that expats have a lot of jobs in KSA, most of those jobs are jobs that Saudis WILL NOT perform. The menial, terrible back breaking tasks. My former father in law from Pakistan, he taught Quran for 30 years in KSA, he has two sons, a daughter with husband, and a child, plus his wife. He makes SAR3000/month. Minus the SAR 600 he will be paying out per month in 2017, that is a lot of money for that family to pay. I think that KSA should just send all the expats home and take care of itself. That way Saudis will realize what “real” working life is like. You should at least offer the choice of paying the tax or going home see how many leave..

    • Well said!
      I for one will not stay. Loss of expertise to major cutting edge education project in the Kingdom.

    • The dependent,remittance and income tax or VAT, all are designed to increase the revenue of the government and KSA is no different. The low oil price put KSA and other Middle East economy in dire situation. On top of that, local, regional and international politics become more unpredictable and some extent more dangerous and unfortunately, it is here to stay for a while. The huge budget deficit is not sustainable for any country including KSA and they must address those issues before it becomes irreversible. The key question is though, how do you implement a tax policy that satisfy everybody? In fact no policy will satisfy everybody but it can minimize the total dissatisfaction in 1-10 scale. Are the KSA leadership doing enough to minimize the dissatisfaction level that people are going through both expat or local? I don’t know the answer, but what I’m seeing more austerity and more tough days are coming unless leadeship are ready to shift gears or abandon the old guns.

  2. You are confused between expat fees and dependent fees. The dependent fees is 100, then increment by 100 each year. Wish authorities consider excluding infants from dependent fees, they hardly consume any utilities.

  3. The data here showing just about the expected collections from the expat’s dependents, why there are no plans for their higher education for their dependents? and that is also within that salaries only which expats are earning for the dedication of work they have given in the process of development of this country.

    What expats should get from this country after giving their whole life for this country only? this subject is very important as the whole world is keeping eyes on this particular subject to see what is going to happen with those expats who have given their lives for this country.

    • Why the tax for under 19 years they are not earning money, if there is no iqama fee so why 100 SR per month. Its like visit visa.
      economy will be go down because 70 to 80 percent expatriates send their families bock to their home country. what they are expecting its against it. if there is no family no more expenditure and they send money 70 to 80 percent to their home country.

      • I totally agree with you and the same words were on my toungh. Who gave this perfect idea i am not able to understand. Send families back n no more tension of expenditure, just send money to our home country and thats it.

      • Brother no one will go back. Situation in our home countries is not ideal, otherwise we won’t be here in the first place.

      • Assalamalaikum all good said my brother if we send our family our expensess will gone with them and our earnings will be Safe 100%

  4. average expat (with families ) receive SR4k to SR7k and average 3 kids , if they have to pay per month sr400 , it is equivalent 5% tax per month . if it is tax per remittances , it may be less because , they may remit less after spending .
    Already introduced big visit visa charge of sr2000 , so they cant bring also .
    And also it needs to evaluate how many visit visa before this amount and after this amount
    when family is here , they spend some money here
    if it tax per emittance of 2% , no expact bother because less salary person sr1000 , pay sr20 and sr10000 remitance pay sr200 .
    but this expat dependent pay is very high .

  5. Is salary increment in these fashion of doubling salary every moving years?
    how about jobless and no salary from employer, legal cases & etc.,

  6. I being an expat myself, I don’t understand the reason people blame the government here. Government sometimes have to take tough measure for overall betterment of society. I understand many expats spent their life in Kingdom, but they spent only for their own good. It’s time we realize that we are in alien country and should be ready to go back to our home country any minute.

    • The debate is not about leaving KSA or staying here. You have spoken out of the topic. The point is about paying tax with no utilities being used. All utilities we use are being already paid by us.

      • But at cheaper rates. Subsidizes cost the govt a lot. They are reluctant to pass down the cost to the whole population, so they want to pass it to the people whose complaint doesn’t really matter.

  7. still government thinking expat will keep their families after implementation of new dependent so called FEES not tax .

  8. Why difference between Saudis and Expatriates. Expatriates are doing work for SAUDI ARABIA LIKE ZIHAT. THEY WORK MORE BUT LESS PAID. ,WHEN A SAUDI NATIONAL WORK LESS PAID MORE .BECAUSE HE IS SON OF THE SOIL.BUT AT THE SAME TIME THE GOVT SHOULD CONSIDER AT LEAST THE DEPENDANTS EDUCATION

  9. By levy fee on dependents would cut the business activity instead. Expats would likely send them back.I would highly appreciate if more facilities are provided to families of expats, such as education etc. It will also generate revenues from tourism and family visits. KSA can collect more money that way.

  10. If expats are spending money in KSA then it is increasing KSA economy. By imposing taxes, it will bring them to make mind by moving either whole family to back home or keeping kids at back home. Which means Saudi will lose more than what they will earn by imposing tax on expat dependents.

    There is already slowdown in all businesses and you will see them closing very soon after imposing tax on expats dependents.

  11. I was planning to send my family on exit/reentry but after reading about the dependant tax, I have decided to send them on final exit. Pay 100 SAR per month for each dependant during their stay in home country pay the same amount here as well. I can’t afford this double fees therefore final exit seems the only available option now.

  12. Greetings,

    So for expatriates we have two blocks.

    1. Re-entry fee
    2. Now dependent fee

    I think, this way expat has left with only one choice is to send family on exit. 🙁

  13. Expats are not allowed to get benefits of govt hospitals govt schooling govt schemes but they will be charged tax under the umbrella of fees. Its very unfair and non islamic. European countries charge taxes for varius govt benefits. Here we bear each and every expense of our dependents and still govt will charge the fees cum tax.

  14. NO TAX ON EXAPTS REMITTANCES?
    What is dependents tax then?
    collecting money from expats with deferent name like the banks are dealin in interest in the name of commission..

  15. At this time of stage where Kingdom is facing monetary and security issue… This is the duty of every national and residents of Kingdom to contribute… I personally welcome the ministry decision and very happy to contribute the levy fees.
    Regards

    Ehsan

  16. May Allah guide us all to the truth and let us not consume wealth unlawfully.
    Saudi Arabia survived so many years because of the Blessing of Allah not because of any economic calculations.
    There was the prayers of those who love Tawheed and also its leaders never consumed wealth unlawfully.
    May Allah continue to shower His Blessings upon this land. And May Allah guide us all to the Haqq.
    Aameen

  17. Expats are not allowed to get benefits of govt hospitals govt schooling govt schemes but they will be charged tax under the umbrella of fees. Its very unfair.. European countries charge taxes for various govt benefits. Here we bear each and every expense of our dependents and still govt will charge the fees cum tax.

  18. Increased Iqama fees, increased visit visa, dependent tax and let’s not forget in 2018 a 5% VAT tax so everything will cost 5% more.

  19. Ok so is it now companies will have to bear all the charges for the family status people if not salary increment is compulsory to pay the govt. back.

  20. To reduce remittance Just STOP RENEWAL OF IQAMAS OF PEOPLE OVER 60 YEARS. There will be huge drop in remittances as these people are taking bulk of salaries.

    • I wish your father would have worked here whole life and then i will see how you will be passing this ignorant comment…… I wish you work here all your life and then by the age of 60 they don’t renew your iqama……

      • He is right. those people earn already… whatever they want…now they should give chance to young people….old age should go home…retire….40 years working in KSA is enough for dem to make properties in thier own countries…..what they want more..why they are sitting here….

      • Umar, don’t forget that you (or that 60 years old person now) came here as an “Expatriate” NOT as an “Immigrant”. Immigrants are permanent settlers and Expatriates are the ones who have to go back. There is different legal status!

        That 60 years old fatty has earned his whole life when life in KSA was dirt cheap, he had made millions and now it is time for him to stop and youngster to take his place. Don’t cry about it.

      • How you can say that no one will go back to our home country as there is a not good condition of earning and expensive life. But even though it will be better than what ever your earning is here and you cannot save.
        So If sr 100 p.m will impose for dependents. In this situation we can’t keep our families here and will send them back. No option other than this.
        Just we will work here alone and can save and support our families.

        Request to government kindly review on your desigen for poor expatriates.

    • Mr. Khan it is the labor who do most of the remittance as you dont allow them to bring their families….. get your statistics right…….

  21. It is a shocking news for expats. Since the budget announced & tax imposed on dependents, most of the expats think to send back their families. Already expats have lost their jobs from big companies & joined new small companies almost at 50% of what they were getting from their former companies. I think the tax decision will not benefit the government but will affect the expats very badly. Government may please review this tax.

  22. First of all kindly introduce a mechanism to identify & punish those so called big,reputed companies who doesn’t settle employees dues , not paying salaries on time & cheating expats .
    Kindly guide,assist & arrange to recover those hard-earned money of Employees from those cheaters prior to levy any charges from innocent expats . May Allah guide us all to the right path..

  23. Wise decision, rent of apartments will go down. It will reduce the consumption of fuel, water and electricity. It will also reduce crowding on private hospitals.

      • He means when large portion of the population will be sent back home- dependants. You need to keep in mind these dependants spend money in the kingdom,once they are forced to leave by the laws. That money will be gone.

  24. All Muslims are brothers and there must be no distinguished.
    One important thing we must keep in mind that it is the time to prosper our own country for some decades. Let us go back to our country and work hard so that we can contribute to the progress of of our country.

  25. I planned to bring my family here, so I translated my certificate on Thursday. On Friday when I saw this news I was shocked. Decided not to bring them here.

  26. I have never ever encountered such a shocking news for expatriates than this. Yet again we have to think in a broadway. Despite the fact that it seems it will affect the expatriates no doubt, also it will affect the Saudi company owners specially in 2018 if they are compelled to pay per head 400 S.r.

    We saw clearly that the private sector is loosing it’s base. There are many companies struggling to pay salaries. Some companies sent there employees in long vacation at least what the future will hold for them.

    The result many expatriates will send back their families, besides even the highly paid one will start to leave in the near future which willl affect the retail market hardly. Economy is inter related network. May Allah brings good time for all of us and protect the Kingdom of Saudi Arabia. After all we are Muslims and we never ever want to see this country in a bad shape.

  27. It’s a confusing news that “No Tax on Remittance”. In fact you are taking more than TAX !!!

  28. All those days were we used this country as an asset for our personal use , today is the time at least to contribute and share the burden to bring some progress , any how May Allah protect all muslim brothers not to get worried lets pray the time will change again inshallah

  29. i already decided to bring home my dependents after reading this…and of course I’ll follow soon insha Allah.

  30. I was planning to get married, better stay single and save sar 100 for fuel as it will increase from January 2017. Yay. I’m still single 🙂

  31. I think the best way which strengthens any country,s economy is foreign investments. Saudi Arabia has a lot of potential to attract foreign investors, but if the policies for them are little soothing. They will come and invest here, which will creates more jobs and they can also implement a reasonable tax on those investors. No doubt its one of the solution to generate money by imposing fee on expats kids but for how long it will be there, they will start sending them back, it will be a big blow to the construction business and the buildings already built will be empty. Locals who pumped all there savings in constructions how come they will survive? We expatriates are standing besides the kingdom to strengthen the economy but they have to categorize the fee structure as per the salaries. Most of the expatriates are earning below 5000 SAR per month.

  32. i agree with some people that ksa economy is not good these days.
    there are many options to consider while taxing the people and
    this one is not the best.it will confer a huge cost to expatriates.

    • Government imposing SR,100/- on each dependents, millions of families wiil go back to their country then the employee has to send 90% of his salary to his family at his country. Then lakhs of houses will be vacant and goods in the markets who wiil buy , the advisory committee has to think and though the negative effects of economy.

  33. Thanks Mohammed Khan,
    I agree 100% with you…

    Wish long live Saudi Arabia
    May Allah Bless all Muslims…. Ameen

  34. He is right. those people earn already… whatever they want…now they should give chance to young people….old age should go home…retire….40 years working in KSA is enough for dem to make properties in thier own countries…..what they want more..why they are sitting here….

  35. I agree with you Elizabeth, it’s really a high time, saudi will realize when all the expats will start leaving to their home countries, May Allah brings good time for all of us and protect the Kingdom of Saudi Arabia for this kind of decision

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