Saudi has no immediate plans to tax expat remittances

The kingdom is reportedly discussing plans to impose a tax of between 2 to 6 per cent on remittances

Saudi Arabia has no immediate plans to impose a tax on expatriate remittances, according to a senior official.

Earlier reports claimed the kingdom’s Shoura Council is discussing plans to impose a tax of between 2 to 6 per cent on remittances.

Former Shoura Council member Husam Al-Angari, who submitted the proposal, suggested a 6 per cent tax on expatriate residents during the first year of their stay in the country. He said the tax could drop to 2 per cent following five years.

Al Angari was quoted as saying that Saudi expats’ remittances had almost tripled since 2004.

According to The World Bank, Saudi Arabia accounts for the second highest volume of remittances after the US, with $37bn in 2015.

However, Mohammed Al-Tuwaijri, secretary general of the Financial Committee at the Royal Court, told Arabic daily Al-Madina that the tax has been put on hold for the moment.

Also read: Saudi to compare expat remittances to earnings

UAE rules out income tax, mulls taxing remittances

Saudi Arabia is seeking new means to increase its non-oil revenues as it looks to diversify its economy.

In its 2017 budget released last week, the kingdom added a provision to levy fees on each dependent of an expat worker.

An expatriate worker will have to pay SAR100 for each of his dependents every month, when the fee is implemented in 2017. That amount will increase by SAR100 every year to reach SAR400 per dependent by 2020.

For companies employing expats, the monthly fee is expected to stand at SAR300-SAR400 per expat employee by 2018, and increase to SAR700-SAR800 per employee by 2020.

With the kingdom estimated to have over 11.6 million expatriates, the proposed fee is anticipated to add over SAR2.67bn per year to the government’s revenues from the first year of its implementation.

Read: Saudi Arabia cuts 2016 budget deficit, to boost 2017 spending

Meanwhile, Saudi’s Minister of Finance Mohammed Al-Jadaan said that details on the exemption of certain nationalities from the fee will be announced later.

Social, political and security circumstances will be taken into consideration to decide on the nationalities who will be exempt from such fees, he said.

Also read: Expat income tax just a ‘proposal’ – Saudi finance minister

Expat income tax will boost GCC revenues, but hit region’s ‘attractiveness’ – IMF