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Saudi Arabia’s expat tax conundrum

Saudi Arabia’s expat tax conundrum

RIYADH: This month was the end of the line for many Asian expatriates in Saudi Arabia who chose to return home following the conclusion of the school year and final exams. With rising levies on each expat every successive year, many of them folded up and made preparations for an early departure. For those unfamiliar with the levy, the Kingdom of Saudi Arabia instituted a serious of financial reforms in an effort to wean themselves off the dependency on oil, which, in recent years, has not proven to be a stable or reliable source of revenue.

Naturally, many of the lower-income expats are the hardest hit by these new economic measures. So much so that a reported 605 expat families have decided to send their children back to their homelands to offset the levies and continue working here on a bachelor status. The countries most affected are India, Pakistan, Sri Lanka, Philippines, Bangladesh and Nepal.

The Saudi government’s move was not met with a measure of confidence as business owners feared that the loss of their skilled expat work force would bring businesses to a halt. The Jeddah Chamber of Commerce and Industry (JCCI) has asked the Ministry of Labour and Social Development to cancel expat levy for firms that have equal number of Saudis and expat workers on their rosters. The committee head of the Jeddah Chamber of Commerce and Industry Entrepreneurship Committee said 25 per cent to 30 per cent of private establishments may shut down if no changes are made to the current policies.