Income Tax For Expats Still Under Consideration In Saudi

by Philip Morton, Investors Offshore.com

01 July 2002

Plans to impose income taxes on expatriate workers are still being considered by the Shoura Advisory Council, according to Saudi Arabia's Minister of Finance snd National Economy, Ibrahim Al-Assaf.

Questioned by the local media as to the potential benefits of such a move, Mr Al-Assaf admitted that: 'It is too early to estimate the additional revenue to be brought in by the proposed tax.'

The plans to impose income taxes at a rate of 10% on expats' monthly salaries have met a mixed reception from the country's expatriate community. Whilst some foreign workers have said that they will welcome the opportunity to contribute to the economy and benefit from improved services, others have threatened to leave the country if the tax - which is higher than previous media estimates of 2.5% of monthly salary - is approved.

The Finance Minister has previously suggested that the new tax will faciliate FDI by allowing the Saudi authorities to cut taxes for foreign companies from 45% to 30%. However, many believe that the imposition of an expat income tax will have precisely the opposite effect on the jurisdiction's international competitiveness, encouraging multinationals to locate elsewhere in the region, where their workers can enjoy greater benefits.

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