Expat Tax: Companies in Saudi Arabia Mull Salary Cuts for Dependent Fee

Published July 6th, 2017 - 02:15 GMT
Saudi riyals. (File photo)
Saudi riyals. (File photo)

Some private companies have decided to pay the new expat dependents fee imposed by the government in order to prevent their highly qualified and experienced foreign workers from leaving the Kingdom.

There are are 2.4 million dependents of expat workers, according to the General Authority for Statistics. There are about 10 million expat workers who work mainly in the private sector.

Economist Fadl Bouainain said private companies will naturally cut some allowances in order to compensate for the payment of the new fee.

The government started imposing the new fee from July 1, 2017 as part of its efforts to increase public revenue. The fee has sent shock waves among foreign workers and many of them have decided to send their families home.

Bouainain told Al-Watan Arabic daily that the new fee will force many companies to revise travel, education and vacation allowances given to foreign workers.

Companies will have two options: Either to increase prices of products or keep them unchanged and cut allowances given to expats, he added.

The General Authority for Statistics said that about 10 million foreign workers in the Kingdom were in the age group of 20 to 64 and the number of their dependents totaled more than two million. There were 10,000 foreign workers aged below 20.

The Passport Department started imposing the new levy on July 1 at the rate of SR100 for every dependent to reach SR1,200 annually. The amount will be doubled in July 2018 to reach SR200 per month and SR2,400 in a year. In July 2020 it will be raised to reach SR400 per month per dependent.

Companies where expat and Saudi workers are in equal numbers will have to pay a levy of SR300 per expat worker per month in January 2018. This levy will increase to SR500 per month per worker in 2019 and SR700 per month per worker in 2020.

Companies where expat workers outnumber Saudis will have to pay a levy of SR400 per month per worker in January 2018. This will increase to SR600 per month per worker in 2019 and SR800 per month per worker in 2020.


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