Saudi Arabia has always been a popular destination for job seekers. However, starting next month, things will change for the worse for expatriates. Starting in July, Saudi Arabia will collect a new tax on expatriates and their dependents. The “dependent tax” will be 100 riyaux Arabia (around Rs 1723 on Wednesday) per month for each dependent. The amount will gradually increase each year until 2020.
According to TOI, several Indian workers in Saudi Arabia are planning to send to their post in India as they are likely to prove a heavy financial burden for them.
Indians make up the largest group of expatriates in Saudi Arabia and, therefore, will be the most affected. According to the report, 41 lakh Indians are working in the Kingdom.
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The expatriation tax is seen as strengthening kingdom revenues to low oil prices. However, according to Gulf News, “reforms such as the rate of foreign workers can help increase government revenues, but may increase the cost of doing business in the Kingdom.”
Companies in Saudi Arabia currently spend 200 Saudi riyals a month to cover the rate for each non-Saudi employee. This applies to organizations where foreigners outnumber local workers.
Migrant rights activist Bheem Reddy Mandha said several people had already returned to their families for the past four months. “The men have become unmarried,” he told TOI.
According to iExpats.com, the International Monetary Fund (IMF) urges Gulf states to introduce more taxes to soften the impact of lower incomes as the price of oil decreases, leaving a black hole in budgets.
“Saudi Arabia has one of the most liberal Labor policies in the world, with very few restrictions on the importation of foreign labor to work in the kingdom,” the government said.
“At present, no Saudi citizens or foreign workers pay income taxes, and this policy will remain in place.”
Why is the Kingdom of Saudi Arabia so popular for job seekers in India?
The kingdom is home to the largest Indian passport holders out of India with about 41 Indian lakhs working there and over 400 Indian companies. This is attractive because, so far, Saudi Arabia does not demand any income tax.
Saudi law provides full protection to all foreigners, including a unified employment contract and provisions prohibiting the employment of people in different jobs in the profession outlined in the contract, said Saudi Arabia’s Al Sati ambassador.
In statements to TOI, he said, the rules prevent workers from working more than five hours at a stretch. Whenever Saudi authorities receive valid information, detailed investigations are ongoing and offenders are facing action.