MANAMA: Saudi Arabia’s Shura Council has shelved a plan to impose a six per cent tax on expatriate workers’ remittances. The decision to withdraw the plan was adopted by 86 of the members present at the session on Tuesday, while 32 voted to keep it on the agenda. The Shura Council thus follows in the steps of the Ministry of Finance which on Sunday said that there was no intention to impose any taxes on remittances by foreigners and Saudi Arabia was committed to the principle of free movement of capital in and out of the kingdom, in line with international standards.
Shura member Abdullah Al Balawi said the proposal had more negative than positive points and should not be discussed, while Abdullah Al Saadoon added that it would not achieve its objectives, warning that it would become a contributing factor for money laundering and smuggling, Saudi daily Okaz reported on Wednesday. “Such a proposal would send the wrong message and would contribute to the flight of capital and investments from the kingdom,” Shura member Sami Zidan said. “This of course would not benefit the Saudi economy especially that we need to attract more capital and investments.”
Shura member Abdullah Al Muneef said that the proposal was based on a study that had no in-depth analysis. Foreigners more often came to Saudi Arabia to help improve their financial status in their own countries, Al Muneef said. “What are the opportunities that are offered to foreign workers to prompt them to invest their money in Saudi Arabia?” he asked. The proposal had suggested a six per cent levy in the first year of residence in the kingdom with the rate dropping to two per cent after the expatriate has lived for five years in Saudi Arabia. Foreigners make up about a third of the total population of Saudi Arabia, estimated by the General Authority for Statistics to be 31,742,308. Most of the expatriates are unskilled or low-skilled workers from Asian countries working in the construction and service sectors.
