Saudi Income Tax For Expats Expected Soon

by Lorys Charalambous, Tax-News.com, Cyprus

30 April 2002

Following a meeting of the Shoura Council on Sunday, it was revealed that the likely threshold for the imposition of a proposed income tax on expatriate workers will be around SR3,000 ($800) per month.

Speaking to the Saudi Press Agency, the Secretary-General of the advisory council, Dr Hmoud Al-Badr, stated that a number of articles relating to the new tax law had been discussed, and that the Shoura expects to approve new legislation within the next two weeks.

Although Dr Badr failed to specify the amount of income tax which will be paid by foreign workers, there has been speculation in the media that a rate of around 2.5% of monthly salary is likely.

According to recent estimates, approximately seven million expatriates live and work in the region, with around five million employed by the private sector. Analysts have suggested that some $18 billion is remitted by foreign workers to their home countries annually.

The Saudi authorities also hope to lure foreign investors and companies in order to boost the region's primarily oil-dependent economy. The draft tax legislation currently under discussion aims to reduce taxes on the profits of foreign companies from 45% to 30%.

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