Expat dependents fees: Economists’ views differ

July 05, 2017

Saudi Gazette report

RIYADH — Economists had mixed views on the economic impact of the newly levied expat dependents fees. Some think that it will help the economy while others are of the view that it will not generate the projected revenue because most expats will send their families home.

Expatriate dependents fees will help phase out “surplus” foreign workers thus helping the economy, Al-Riyadh Arabic daily quoted some economists as saying on Tuesday.

“There is a surplus of expatriate workers in the country. The new fees will decrease the number of expatriates in the country by 20 percent. A surplus of expatriates has been an economic burden over the past few years. Every expatriate costs the government SR50 a day in electricity, gas, water and other expenses,” claimed Mohammad Al-Qahtani.

Essam Al-Zamil, an economist, said many expatriates will have to leave the Kingdom or send their families back home. As a result the real estate prices will come down.

The expat dependents fee is a vital decision to solve the issue of unemployment in the country, said Al-Zamil.

Financial consultant Ali Al-Jafari said the fees could be a burden on expatriates, many of whom will send their family members home and prefer to stay in the Kingdom alone.

This will result in high remittances and less spending in the Kingdom, he said.

Such a trend will have negative repercussions on the economy, said another economist, adding that the projected revenue collection from the expat dependent fee will be in negative as most foreign workers will send their families home.

As part of the government’s Fiscal Balance Program, a resident’s dependent is expected to pay SR1,200 for one year as of July 1, 2017.

All dependents are included in the regulation, including children, wife, wife’s parents, as well as maids and drivers working directly for a sponsor.

Monthly fee for each dependent costs SR100 this year. It will increase by SR100 per month every year reaching SR400 per month per dependent by 2020.

This will generate SR1 billion in revenue by the end of the year and SR65 billion by 2020 based on the current number of expat dependents. But now foreign workers are sending their families home on final exit. So the projected revenue generation cannot be achieved, according to economists.

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