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Saudi Arabia to tax Expats from next month

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The basic problem with taxation is that you do indeed have to gouge the revenue out of the population somehow but then said population might and often does object to being so gouged. Which is why taxation comes in such a blizzard of forms, some that we recognise and many others that we don’t.

For example, among economists it is well known that at least some portion of the corporate income tax is paid, really, by workers in the form of lower wages. This is also the result of many taxes on the returns to capital. But this isn’t how it appears politically–thus the unending calls for companies to be taxed more, people not quite grasping who it is that is really paying the tax.

At which point we’ve this interesting proposal from Saudi Arabia:

Saudi Arabia has always been a popular destination for job seekers. However, starting next month, things are about to change for the worse for expats. From July, Saudi will be collecting a new tax from expats and their dependents. The ‘dependent fee’ will be 100 Saudi riyals (approx. Rs 1,723, as on Wednesday) per month for each dependent. The amount is expected to increase gradually every year until 2020.

This is an extension of a system already in place:

Companies in Saudi Arabia currently spend 200 Saudi riyals per month to cover the levy for every non-Saudi employee. This applies to organisations where foreigners exceed the number of local workers.

There is no income tax system in Saudi Arabia at all, the country has generally floated along on that great gushing river of oil revenues. Which is starting to trickle a bit these days and thus the looking for new revenue sources. Thus the extension of that levy to dependents as well as to the actual workers.

All of which is approaching a tax nirvana of course. Because if you tax foreigners then you are, by definition, taxing those who have no input into the local political system and thus have no method of complaining about it. It’s not quite perfect for as Monty Python noted what you really want to be able to do is tax foreigners living in foreign countries. But it’s still a pretty good attempt at solving the problem. Gaining tax revenue without annoying your own people too much.

Full article: https://www.forbes.com/sites/timworstall/2017/06/21/saudi-arabia-achieves-tax-nirvana-tax-foreigners-as-monty-python-suggested/#2b991b9f4e68


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