RIYADH: Oil-rich Saudi Arabia has been a popular destination for expatriates since they didn’t have to pay tax on their income and could get most utilities and many other essential commodities at highly subsidised price. The advantage started diminishing with prices of electricity and water going up by 30 percent after the government slashed the subsidies on them since December last year. The prices of many of these items and other essential commodities are likely to go up further next year when the value added tax (VAT) comes into force from January 2018. But what has set alarm bells ringing for the expats is a new levy coming into force from 1 July 2017. The fee called ‘family tax’ or ‘expat levy’ was proposed in the Saudi budget for the year 2017 to shore up its sagging revenue in the aftermath of the decline in the global prices of oil.
The fee will be 100 Saudi riyals (Rs 1,721 as per the current exchange rate) per dependent this year. It will be doubled to 200 Saudi riyals for every dependent from July 2018, tripled to 300 Saudi riyals in 2019 and quadrupled to 400 Saudi riyals from July 2020. The fee will be collected annually by the department of passport at the time of renewal of Iqama (resident permit). This means an expat living with his wife and two children in the kingdom will have to pay this year 3,600 Saudi riyals or Rs 62,000 when he goes for the renewal of his resident permit if he likes to retain his family with him. Expats are not expecting their employers to bear or share the additional expense since most of the private companies are already burdened with a hefty fee for employing the expats. The Saudi government is now charging companies in which expats outnumber Saudis 200 Saudi riyals per month per expat worker. The fee introduced under the naturalisation of the work force programme by the labour ministry will be increased to 400 Saudi riyals from January 2018. It will go up by 200 Saudi riyals every year until 2020.
Leaders of Indian community in Saudi Arabia said that the proposed expat levy will not be affordable to majority of the Indian workers. They may have to either return or send back their families, says Anil Mathews, general secretary of the Dammam-based Pathanamthitta Non- Residents Association of Malayalees. He told Firstpost that employers were not likely to compensate the workers with a hike in their salary since the recession caused by the decline in the oil price had badly affected private companies in which majority of the Indians work. On the contrary, the salaries of many were delayed or cut and increments stopped. An AFP report said that the crisis had also led to mass layoffs. Saudi Binladin Group, a multinational construction conglomerate based at Jeddah, laid off around 70,000 expats. It said many oil refiners, banks and shipping firms were slashing thousands of jobs.
Several companies have also defaulted wages to their workers. Oger Ltd, another top construction firm, was even penalized by the Saudi government by withdrawing its services, including social security and passport affairs. The company claimed that the salaries were delayed as it had not received payments for the projects that were already implemented. The AFP report said that the drop in global oil prices by about half since 2014 had left the kingdom with a huge budget deficit and billions of dollars in debt to private firms, chiefly in the construction business. The situation is likely to become worse with the government adopting more stringent measures to bridge the deficit.
