Saudi: Tax forces Expat families to leave

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‘Expatriate dependant fee’ for each family member raised to 1,200 riyals from 100 riyals

An astronomical hike in the ‘expatriate dependent fee,’ or family tax, in Saudi Arabia is forcing thousands working in the kingdom to send their families back home.

Effective from July 1, the Saudi government, which is on an aggressive drive to localise its labour force and shed the weight of expatriate workers, imposed a new fee on all members of the expatriate families.

Accordingly, for each member of the family, an expatriate worker has to pay 1,200 Saudi riyals a year. The tax was just 100 riyals a year for a family.

The tax will hit a sizeable section of Indians, who make up the largest expatriate community in the kingdom.

An estimated 30 lakh Indians live in Saudi Arabia, which employs the largest number of Indians anywhere in the world (the UAE is a close second). Keralites are the largest segment of the Indian community in the kingdom.

“The hike means that a four-member family has to pay close to ₹1 lakh a year,” says Ghulam Hussain Kodakkadan, chairman, Global Pravasi, an NGO. “The fee is more than a month’s salary for most Indian workers.” Already, several families had returned, he said.

Fee to be doubled

The tax is expected to generate 65 billion riyals by 2020. Revenues apart, the real aim of the tax is to shrink the expatriate population. It’s not just the current fee that worries the Pravasi community. The government proposes to double the fee next year and by 2020, the family tax will be 4,800 riyals for each dependent member of the expatriate. “This means that families of low-income Indian workers will find it tough to live in Saudi Arabia,” Mr. Kodakkadan says.

And, this is exactly what the Saudi government, which has drawn up a plan to reduce its heavy dependence on oil production and expatriate workers, wants. Saudi Arabia has one of the highest unemployment rates in the world.

Nitaqat programme

Over three years, the kingdom has been aggressively implementing the Nitaqat nationalisation programme, with industries replacing foreign workers with Saudi youths. Wages have come down sharply for expatriates.

The Saudi General Authority for Statistics estimates that there are one crore expatriate workers in the kingdom and 24 lakh dependants.

The expatriates’ dependants are now being viewed as a huge burden on the economy and one estimate claims that each expatriate costs the government roughly 1,500 riyals a month in terms of subsidies on water, electricity, gas and other essentials.

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