The Kingdom of Saudi Arabia plays host to eight million foreign workers, from domestic helpers to executives in the oil and banking industries. The primary attraction of working in Saudi Arabia is the tax-free status given to expats who have to abide by many restrictions allowed in their home countries.
As the country focuses on encouraging more Saudis to join the workplace, a heated debate has ensued focusing on taxing foreign workers.
Currently, an estimated SR 100 billion
is sent out of the country by foreign workers each year.
The rejection of the proposal to levy income tax on foreign workers reinforces the position taken by the Shoura Council in 2003. The Saudi Gazette
says it rejected proposals to tax foreign workers who earned above SR 3,000 per month almost a decade ago.
Expatriate Dr. Victoria Charlston told Arab News
that the notion of foreign workers is in itself "laughable as many so-called foreigners are third and fourth generation citizens who would long ago have enjoyed equal rights to citizens should they have settled elsewhere in the world." She also pointed out that if the proposal to tax foreign workers was implemented much of the workforce would leave the Kingdom as financial reward is pretty much the only reason Westerners decide to spend a stint of their working lives in [Saudi Arabia]. There is little other reason or incentive."
As the proposal to tax expat workers was defeated by 70 to 45, the idea has once again been shelved. However, proposals are being discussed to implement VAT and other indirect taxes.