Job Discussion Forums

[nomad soul]

Taxing expats under spotlight
By Arab News | Mar 30, 2012
(Source: http://arabnews.com/saudiarabia/article602130.ece )

RIYADH--The long pending issue of imposing income tax on foreigners would come up again for discussion at the Shoura Council on Sunday. The finance committee of the Shoura has recommended carrying out fresh studies on imposing tax on all foreigners working in both public and private sectors in the Kingdom, Al-Riyadh newspaper reported yesterday.

The new proposal was made by Muhammad Al-Quwaihes, member of the Shoura, who presented it as an additional recommendation attached to the annual report of the Department of Zakat and Income Tax, which had already been discussed by the Shoura. According to Al-Quwaihes, levying income tax on foreigners would be helpful in further boosting the ongoing Saudization drive. �Foreigners working in the Kingdom transfer about SR100 billion to their countries of origin annually. The government is neither levying a single riyal in tax or Zakat on their remittance nor do they need to pay any kind of taxes,� he said.

Al-Quwaihes noted that most of the countries in the world impose income tax on individuals who work and earn money in those countries. �It is high time to impose income tax on foreigners. It is also to be noted that foreign workers are beneficiaries of all government support and subsidies given to utility services and products such as water, electricity, wheat, and petroleum products,� he said.

Nearly a decade ago, the Shoura Council reviewed the possibility of imposing taxes on foreign workers but later the proposal was put on the shelf. There are eight million foreigners in the Kingdom, an overwhelming majority of them working in the private sector. Both Saudi and expatriate employees working in the Kingdom had to pay income tax until it was abolished in 1975. Later, there were moves to reintroduce income tax on foreigners in late 80s. However, in 1988, King Fahd scrapped the plans.

At present, only Saudi citizens and Saudi companies need to pay Zakat of 2.5 percent annually on profits and on the assessable amount for individuals, in addition to a 45 percent tax on foreign investors. In a bid to attract more foreign investment into the Kingdom, the government slashed, in 2004, the tax rate imposed on foreign investors from 45 to 20 percent.

(End of article)

[2buckets]

That sucking sound is the rush of ex-pats to the exits as they did in the mid-eighties.

[nomad soul]

Not anytime soon.

Saudi Arabia Shura Council rejects move to tax foreigners
By Habib Toumi, Gulf News | April 1, 2012
(Source: http://gulfnews.com/news/gulf/saudi-arabia/saudi-arabia-shura-council-rejects-move-to-tax-foreigners-1.1002849 )

MANAMA---Saudi Arabia's Shura Council has turned down a proposal to tax foreigners on the money they make in the kingdom.

"The Council heard views from those who supported the proposal and those who opposed it," Mohammad Bin Abdullah Al Ghamdi, the Council's secretary-general, said. Several members said that the recommendation to tax expatriates in both the private and public sector was not appropriate at a time when Saudi Arabia is engaged in development activities, he said, quoted by Saudi news site Sabq on Sunday. Those who supported it argued that its application would narrow the gap between the salaries of Saudis and non-Saudis and would boost the employment of Saudi nationals.

Last week, Shura Council Member Mohammad Al Qouwhis said that his tax proposal would help create more jobs for Saudis as recruiting foreign workers would cost more. According to Al Qouwhis, foreigners did not pay zakat, the mandatory alms for the needy in Islam, and their remittances last year were over SR100 billion, Saudi Gazette daily reported. He added that foreigners benefitted from subsidized services and essential consumer products.

Nine out of the ten jobs in the private sector are held by expatriates.

In January 2003, the Shura rejected a proposal to impose an income tax on expatriate workers whose monthly salaries exceeded SR3,000, arguing that it was inappropriate to levy taxes on the salaries of non-Saudis regardless of their amount, the Saudi daily said.

(End of Article)

[Imdramayu]

Is there a gap between what Saudis make and what foreigners make? I thought they generally made more (in positions with comparable qualifications & responsibilities).

So, how would income tax narrow the gap? Would income tax really make hiring Saudis more popular & acceptable? Is money the main reason foreigners are preferred over Saudis?

Im

[johnslat]

Dear

"Is money the main reason foreigners are preferred over Saudis?"

Generally speaking, no. The main reason is that most Saudi employers know how many Saudi "workers" behave all too well .

Regards,
John

[Imdramayu]

So, John, the notion that raising the cost of hiring foreigners by imposing income tax is a red herring.

Any why should Zakat should be even mentioned since most foreigners either pay it in their home country (if Muslim) or don't pay it at all (unless you call tithing it's sister practice).

Im

[johnslat]

Dear Imdramayu,

"Any why should Zakat should be even mentioned since most foreigners either pay it in their home country (if Muslim) or don't pay it at all."

If one red herring is good, two must be better - what Saudi in a position of power would dare admit the truth that they all know?

Regards,
John

[babur]

[veiledsentiments]

[desertdust]

I bet they rejected the idea because that would mean that Saudi companies

would have to pay their workers on time! The tax office would definitely

want their taxes/zakat paid punctually each month.

[CamTam]

This subject of taxing foreigners comes up from time to time in Saudi Arabia, but generally, the Saudi government is loathe to do anything in favor of such a motion. It is too unpopular with the much-needed foreign presence in Saudi Arabia. As John stated, the Saudis know what kind of workers they would likely have to employ if all the foreigners left. Contrary to some people's ideas of them, not all Saudis are entirely clueless.

[posh]

Last week there was a story in the paper about an Indian shepherd working near Jeddah who hadn't been paid for 18 years. His boss said he didn't have one Riyal to pay salaries. Maybe if he does get paid, they'll hit him for back zakat.

[Mysterious]

[posh]

Here's the poor chap:-

http://arabnews.com/saudiarabia/article604925.ece

[veiledsentiments]

So... back salary owed equals $100,000 or $1400 a year or or just over $100 a month. So his salary was somewhere between 300-400 SAR a month... and presumably all the mutton he could eat.

As we have often said... slavery is alive and well in the Gulf.

I wonder what happened to his wife...

VS