Saudi expat tax will harm economy - Grand Mufti

Kingdom's top religious authority says policy is “not based on clear judgment”

Saudi's Grand Mufti Sheikh Abdul Aziz al-Sheikh. (AFP/Getty Images)

Saudi's Grand Mufti Sheikh Abdul Aziz al-Sheikh. (AFP/Getty Images)

Saudi Arabia’s top religious cleric claimed the government’s decision to significantly increase fees for companies that employ expats could affect the national economy, according to Saudi Gazette.

Following the introduction of a new levy in November, employers with a higher proportion of foreign staff than Saudis must pay SAR2,400 (US$640) each year per overseas employee.

While the move has earned praise from the likes of Prince Alwaleed bin Talal, the Arab world's wealthiest businessman, the controversial policy has now drawn criticism from Saudi Arabia's Grand Mufti, the kingdom's highest religious authority. Sheikh Abdulaziz Al-Alsheikh described the decision as "unjustifiable" and said it was “not based on clear judgment”.

"The Ministry of Labour has to explain the logic justifying this levy on expats,” he was quoted as saying during a recent lecture at Imam Turki Bin Abdullah Mosque in Riyadh.

“Are there any convincing reasons for levying this amount of money on expatriates?”
He urged the ministry to review its decision and suggested expats could sue the government over the “excessive” payment.

In an unusual move, the Shoura Council was not consulted over the fee hike, according to Saudi Gazette.

Meanwhile, chambers of commerce and industry claimed the decision could deter expats from going to Saudi Arabia or remaining there, potentially affecting the national economy.

The Ministry of Labour introduced the policy in a bid to keep unemployment among Saudi nationals under control, which is currently about 12.2 percent. Roughly nine-tenths of employees in the private sector are from overseas, according to official estimates.

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Posted by: Sultan

This is a good plan. We need to reduce the number of workers from Pakistan, India and South Aisa. They have lived in Saudi for decades and if we keep them here the day may come in which we will be forced to give them citizenship. We have to send them back home and this is a good way to do it

Posted by: Shrav

@sultan - I agree with your view. I would also like to make one thing clear. If you don't want Indians, Pakistanis and South Asians, do not ask for them? Your country is always giving them an OPPORTUNITY for a FEE. It is more like a barter system of exchange concept. GCC countries want the work to be done and improve their economy and expats want money. Nothing more nothing less.

Posted by: procan

How about just start with longest in Country first to go, including there families .Perhaps pay there way home and a little cash bonus for there hard work and a hand shake .Thanks have a good life.

Posted by: Joe Mallone

I am currently working in Saudi Arabia, I feel that the law makers are out of touch with what's happening on the ground,they are too far up in their Ivory towers.
This is blatant discrimination! Saudi's are ill equipped,unskilled and lack the right qualifications to function effectively in the work place. Discouraging expat workers will simply bring the economy to a standstill.....eventually.

Things are bad for most Asian expats who fill jobs most of us wouldn't dare think of taking up,this is just the tip of the iceberg. These poor souls have far bigger problems.

Also,there are lot's of workers here who buy visas from a sponsor and work freelance,these people will have to cough up the extra 2,400 SAR. not the sponsor. They work for peanuts and have to pay the sponsor

P.s I am making arrangements to leave in the next few months never to return again. I'd rather go to Dubai

Posted by: Calimero

I don't understand the article and the reaction below
1) If the Tax is for the company or for the employee? If for the company, then it means inflation as cost will be passed down to consumers and wil make good more expensive. If cost of living is more expensive in all areas, salaries will need to be udapted or most people with modest salaries doing all the jobs nobody wants will leave. Not sure locals will benefit, neither from the jobs or the situation.
2) While going to Denmark, the rules where known and i doubt they changed while you where there. The main issue expats compalin about in GCC countries is the lack of clear laws, the sudden changes and the lack of appreciation and respect for foreign investors thatn are always in an unsecure situation and risk loosing everything even without doing anythng wrong. Not good for building long term sustainable economy and expertise

Posted by: jon

i agree with RAH, and to steve no one asked for anyone to come people just move wherever there are oppourtunities its human nature. the reason they complain is because since most gcc countries have a low population, they feel they are the minorties in their own lands. they have a right to question and be fearful of the influx of foreigners coming in. finally i don't see why is the sheikh involved in this, he is the mufti and his duties lays within the realm of the faith not the economics of a country.

Posted by: Vincent

Dear Jon wake up as it seems you know everything about Saudi and if I'm not wrong, it's not about a country which has separate politic and religion you are talking about . . . it's Saudi where religion is involved in politic, economic as well as in the private sphere It's a fact and a societal choice done by one of the most conservatism Middle East country ruled by the same familly since its creation in 1932, as clearly mentionned in the article most of the important measures pass through the "shoura Council" and Imam there are involved in everything as there's no separation in between pubic and private sphere.
As an expat, Accept it, leave it or don't go there, I made my choice. By the way the very rapid and constant growth the last decades is due to natural ressources and . . . .expats from all over the world and a last survey shown that more than 1/2 of the population never even tried to find a job especially in private sector.

Posted by: Peter

@ RAH what a silly comment. Does not really have much to do with the article and problem at hand.

What Steve is saying is correct. After all 600andsomthing $ a year per employee is not a lot and a small price to pay compared to the tax in other countries. However, you got to remember that this will be pushed out to the consumers and end users in order for companies to make up for the loss. So the fact of the matter is that consumer product will increase and you end up having to spend more.

Finally, it is quit backwards (if you ask me) to have a "if you don't like it, then leave" mentality. Expats, Nationals etc can not agree on everything. I am sure Nationals and Nationals don't agree on everything! This is normal as it is normal to find better alternative to a given challenge instead of just ignoring it and telling people that they can just pack their bags and leave. this is not 1813 you know....

Posted by: Geko

MO, Companies hiring the guys you refer are not small privates or groceries. These are corporate, banks, business houses purely owned by Locals and only locals. Pls tell me, WHY don?t they recruit you even for half instead of 1/3 of their salary?

Possibly, you are lucky 1/3 they give you a chance many not... Remember the local PRO publications and interviews on paper? Double the loss in than out. Results are good lessons, we should learn before making the same mistake...

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