HR and tax alert | June 2017

Saudi Arabia to introduce expatriate dependent levy

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Executive summary

The Saudi Arabian Government has confirmed the introduction of an expatriate levy effective from 1 July 2017. All foreign nationals in Saudi Arabia who are sponsoring dependents will have to pay a monthly fee of SAR100 (approximately US$27) per dependent and this fee is likely to increase every year until 2020.

Background

The National Budget announced in January 2017, introduced increased visa fees for foreign nationals (from countries without bilateral agreements with Saudi Arabia). The budget also indicated potential new fees payable by foreign nationals who sponsor dependents that reside in Saudi Arabia. The dependent fee is payable for spouses, dependent children, parents, house maids and domestic workers i.e. where dependents are eligible for sponsorship by the foreign national.

Key development

The dependent levies will be applied from 1 July 2017 and it is reported that these will increase on an incremental basis as follows: 

Year

Dependents for expats

2017

SAR 100 per month per dependent from July 2017 onwards

2018

SAR 200 per month per dependent from July 2018 onwards

2019

SAR 300 per month per dependent from July 2019 onwards

2020

SAR 400 per month per dependent from July 2020 onwards

The dependent fee will be calculated on a monthly basis, and is paid to the Jawazat (the issuing office of new and renewal Iqama visas) annually along with the foreign national’s new residence visa (Iqama) or renewal application.

In accordance with Saudi Arabian local regulation, employers will remain liable for payment of all fees associated with the employee’s work and residency authorizations. These include the costs of recruitment, fees for initial and renewal of residence and work permits, delay fines, professional title amendments, exit and re-entry visa fees as well as repatriation tickets on cessation of employment. The Saudi Arabian government however, has not indicated whether the dependent fee is to be paid by the employer or the employee. Therefore, the decision of whether the employer bears the levy cost is at the employer’s discretion.

Next steps

All employers and their foreign nationals should be informed of the confirmed additional charges effective from 1 July 2017. Employers with employees working in Saudi under formal assignment policies should consider whether the levy is reimbursable under those policies and communicate this accordingly.

The new fees are applicable to foreign nationals with dependents currently residing in Saudi Arabia but only at the time of lodging their renewal Iqama applications. New arrivals after 1 July 2017 will have to pay the dependent levy fees from this date.

EYG no. 03885-173Gbl

For additional information with respect to this alert, please contact the following: