The Shoura Council is expected to make an announcement on proposals to tax expatriate workers in Saudi Arabia at a rate of 10% of their monthly earnings 'within days', according to the Arab News.
Citing an unnamed high-level source, the news service suggested that the Council has not yet reached a conclusive decision on the rate of tax to be levied on expats, although the draft bill which has been under examination for the past three months recommends 10% on monthly earnings exceeding SR3,000 ($800).
According to Abdul Wahab Abu-Dahesh, a senior economist at Riyad Bank, income tax imposed at this level on overseas workers would net the government an extra SR6 billion ($1.6 billion), which could be used to faciliate the planned reduction of profits taxes on foreign companies from 45% to 30%.
However, many expatriates are unhappy with the Saudi government's plans, according to Arab News. Speaking recently, Abdul Rahman Al-Jeraisy, president of the Council of Saudi Chambers of Commerce and Industry warned that such a move may damage the Kingdom's attractiveness as a location for international business, despite the planned corporate tax reduction:
'We are living in a world of intense competition. A number of neighbouring countries provide various incentives to foreign investors to attract capital and technology. In my opinion, the introduction of this tax will definitely have a negative impact on the investment the Kingdom attracts from the outside,' he told the local media.
If approved the expatriate income tax will apply to all foreign workers, except those from countries with which Saudi Arabia has a double taxation agreement, and Gulf Arab nationals, who are already subject to the Islamic zakah tax.
A comprehensive report on the taxation of expatriate executives in a number of onshore jurisdictions is available in the Tax-News Reports Shop at http://www.tax-news.com/reportshop/
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