Saudi chamber asks for new foreign worker levy to be scrapped

Jeddah Chamber of Commerce and Industry (JCCI) has reportedly asked Saudi Arabia’s labour ministry to cancel a recently introduced levy on companies that employ foreign workers.

From January 1 companies are being charged a SAR300 or SAR400 ($80-107) monthly fee for each foreign worker, with firms that employ an equal or greater number of Saudis than expats paying the lesser amount.

The JCCI proposed that the fee be cancelled for firms in the second category under a list of seven recommendations it sent to the ministry in a report, according to Saudi Gazette.

It also recommended that companies should not have to pay the fee for a foreign worker that has been issued an exit visa. The current system requires the full amount to be paid at the time of issuance or renewal of the work permit.

The report comes amid concerns from the consultative Shoura Council and the Council of Saudi Chambers that the new foreign worker levy is taking a particularly heavy toll on small and medium enterprises.

Read: Saudi councils call for foreign worker levy to be scrapped

Some businessmen estimate up to 40 per cent of smaller businesses could exit the market due to spiralling costs linked to the fee.

Only companies with five or fewer companies are exempt from the levy, the Ministry of Labour and Social Development confirmed just days before its January 1 introduction.

Read: Saudi companies with five or fewer employees exempt from new expat fees

JCCI said that 15.6 per cent of companies in Jeddah were on the verge of closure following the fee’s introduction and 11 per cent are facing financial burdens because the ministry is asking companies to continue with the collection of cumulative bills, according to the publication.

Furthermore, 5.6 per cent of firms said the cumulative bills made it difficult for them to expand their activities and 95.2 per cent voted against the ministry’s decision to collect cumulative bills.

Several other chambers also sent letters to the ministry to postpone the fee’s introduction to allow more time to prepare.

Next year, the fee per worker will increase to SAR500-600 ($133-160) a month and then SAR700-800 ($187-$213) a month in 2020.

The government is expecting to raise $6.3bn from the new foreign worker fee in 2018 $11.73bn in 2019 and $17.33bn in 2020, Okaz reported in December.

Last July, the kingdom also introduced a SAR100 a month fee for each dependent of a foreign worker. This again is paid at visa issuance and renewal and will increase by SAR100 each year to reach SAR400 ($106.64) in 2020.

Read: Saudi labour ministry denies reports of increase to dependents fee

JCCI said the labour ministry should not hold companies accountable for an employee that does not pay the fee.

Currently companies face restrictions on hiring new workers and obtaining business licences if the two fees are not paid on time.