Saudi Arabia: Expat tax “unjustifiable”

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Saudi Arabia's Grand Mufti, the kingdom's highest religious authority, Sheikh Abdulaziz Al-Alsheikh, has criticized the decision of the Saudi government's decision to impose US $640 "tax" on expats terming it AS "unjustifiable".
Saudi Arabia’s Grand Mufti, the kingdom’s highest religious authority, Sheikh Abdulaziz Al-Alsheikh, has criticized the decision of the Saudi government’s decision to impose US $640 “tax” on expats terming it AS “unjustifiable”. (photo used for illustrative purposes only)

Saudi Arabia’s top religious cleric believes that the government’s decision to significantly increase fees for companies that employ expats could harm the national economy.

In November last year, the government had decided to impose an annual fee of USD 640 per employee on companies that employed a higher proportion of foreign staff than Saudis. The move was intended to encourage the private sector to employ more Saudis and provide employment to fresh graduates being churned out at a higher than ever rate by Saudi universities.

Currently, unemployment among Saudi nationals is estimated to be about 12.2 percent. Saudi nationals prefer to work in the public sector because of higher pay and shorter working duration. Official figures suggest that expats account for around 90 percent of employees in the private sector.

According to the Saudi Gazette, Saudi Arabia’s Grand Mufti, the kingdom’s highest religious authority, Sheikh Abdulaziz Al-Alsheikh, has criticized the decision and termed it “unjustifiable”. He thinks that it was “not based on clear judgment” and the Ministry of Labor should explain the rationale behind this additional tax. In case the decision is not reviewed, he feared that expats may sue the government over the “excessive” payment. He expressed these views while delivering a lecture at Imam Turki Bin Abdullah Mosque in Riyadh.

It is worth mentioning that, contrary to the usual practice, the Shoura Council was not consulted over the fee increase. Members of chambers of commerce and industry also lamented the decision and claim that it may deter expats from coming to Saudi Arabia or staying there for longer periods. If the kingdom fails to attract global talent, it would hamper growth of the national economy and make the country less competitive.

 

 

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