No tax on expat remittances but huge hike in levy and other taxes

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.