Saudi Arabia begins imposing dependent fees for expatriates

Author: PM editorial | Date: 5 Jul 2017

New tax could mean foreign workers have to send their family abroad if they can’t afford monthly payments

Expatriates working in Saudi Arabia who have their family with them must now pay monthly fees for their dependents.

The new law came into effect on 1 July and the first people to pay the fees were those going abroad on holiday with their families. Exit-reentry visa fees for family members must be paid, but they were first prompted by the online payment system to settle any outstanding amounts they have for their residency permits (iqamas), including dependent fees.

The dependents fee is currently SAR100 a month but this will increase by SAR100 annually until 2020, when it will cost SAR400 a month. That equates to SAR4,800 (around US$1,280) a year; and if the expatriate has a partner and two children, they would have to pay SAR14,400 a year in dependents fees.

The move is expected to generate up to SAR65 billion in extra tax revenue by 2020, according to the Arabic-language newspaper Okaz.

“I totally understand Saudi Arabia’s need to give more opportunities to its nationals and tackle unemployment,” Saliha Gardezi, a Pakistani expatriate born in the Kingdom told the Saudi Gazette. “However, the decision to effectively tax expats to the point that many of them will be forced to leave is demeaning to those people who have also contributed to the country’s development alongside their Saudi brothers and sisters.”

Those classed as ‘dependents’ could extend beyond family members, if there are house workers or drivers that are registered under the name of a sponsor.

According to Gulf Business, an official at Riyadh Chamber of Commerce and Industry was quoted earlier this year as saying the new fees would have an “adverse” impact on the private sector.

For some lower paid workers, it could mean having to send family back to their home country. There are around four million Indians living in Saudi Arabia and they could find themselves the expat group hit hardest.

“Some families I know have made plans to return to Hyderabad as they feel they cannot afford to stay there any longer," Mohd Taher, a computer professional who lives in Dammam, told The Times of India.