Bad news alert! Saudi Arabia wants to tax expats
FollowAs Saudi Arabia looks to revamp its economy, reports are doing the rounds that Riyadh wants to raise its non-oil revenues by introducing income tax on foreign residents working in the country.
Earlier this week, KSA announced “Saudi Vision 2030” - a grand plan that promises to triple non-oil revenue to roughly $141 billion, and the creation of 450,000 jobs outside the government sector.
As the kingdom looks at alternative sources of income to counter the plunge in oil revenue, finance minister Ibrahim al-Assaf told local press that a proposal to tax foreign residents is being formulated, Abu Dhabi-based The National newspaper reported.
“This is a proposal, an initiative that will be discussed but nothing has been approved until now," Assaf told a news conference in Jeddah, where officials this week are presenting a plan to overhaul the nation’s economy by 2020.
“It will be researched and it is in reality an old proposal, and it was presented in the past, but it is one of the initiatives that will be raised by the finance ministry."
The status of a tax-free state has remained the biggest allure that has brought foreigners to the Kingdom of Saudi Arabia. The decision to impose taxation, however, has sparked much concern among the expatriates.
"The allure of Gulf countries for many expatriates is how much they can save, not spend, and how much they can remit back to their countries,” said Talal Malik, a Saudi-based consultant told The Financial Times. “If income tax is applied, there will increasingly be expectations of greater standards of living.”
This is, however, not the first time that KSA has floated such as idea. Back in 1980s, during the oil price slump, the government had suggested a similar proposal. However, the Saudis were forced to withdraw the idea after a widespread outrage that saw strikes by foreign workers, including military contractors.
Saudi Arabia, which has a population of 30 million, has no plans to impose income tax on Saudi nationals. As of 2015, there are an estimated 3 million Indian citizens residing in Saudi Arabia.
