IMF Urges Saudi To Speed Up Tax Reform

by Lorys Charalambous, Tax-News.com, Cyprus

24 October 2002

Saudi Arabia has been urged by the International Monetary Fund to speed the process of economic and tax reform, according to the Financial Times.

Reporting on Wednesday, the FT revealed that: 'In a staff appraisal after consultations with the Saudi authorities, the IMF recommends that Saudi Arabia speed up the implementation of a proposed income tax on expatriate workers, who make up 40% of total manpower, but also extend the tax to Saudis.'

The IMF also called for measures to reduce expenditure, and urged the Saudi authorities to announce a clear timetable for its planned privatisation policy, warning that without an acceleration of the reform process, the burgeoning public debt is likely to continue to increase, as is pressure on public finances, and both local and foreign investment may be discouraged.

According to the FT report, the expat worker tax will not be extended to Saudi nationals 'because taxing locals remains too politically sensitive for the regime'. However, the plans to tax expatriates, set to come into force within the next two years, are also somewhat sensitive, and according to experts, may discourage foreign companies and expat professionals from locating in the region.

Recommended