Saudi Arabia starts levying family tax on foreign workers
Riyadh: Saudi Arabia on Thursday said it had begun taxing foreigners working in the private sector as part of fiscal reforms aimed at coping with a drop in oil revenues.
Long a tax-free haven for expatriates, the Saudi economy was dealt a serious blow in 2014 when global crude prices plummeted.
The kingdom, the world’s largest exporter of oil, has since launched an economic diversification plan and slashed state spending in an attempt to cope with a hefty deficit.
On 1 July, foreigners working in the private sector began paying a family tax of 100 riyals ($26.60/€23.40) per month for every minor or unemployed relative living in the kingdom, the Saudi general directorate of passports said in a statement.
An estimated 11 million foreigners work in the Saudi private sector, with 2.3 million of their dependents based in the kingdom, according to the Public Authority for Statistics.
The tax is expected to increase every year until 2020, when it will cap at 4,800 riyals ($1,280/ €1,126) per dependent annually.
Saudi Arabia projects a government budget balance in 2020.
Saudi Arabia’s ambitious “Vision 2030” plan, unveiled in April 2016, aims to broaden its investment base and diversify the once oil-dependent economy.
The plan will also see the sale of nearly 5% of state-owned Aramco—the world’s largest oil company reportedly worth between $2 trillion and $2.5 trillion.
Saudi Arabia, the United Arab Emirates (UAE) and Qatar aim to introduce value-added taxes in 2018 to deal with fiscal deficits, followed by the remaining Gulf Cooperation Council states—Bahrain, Kuwait and Oman.