JEDDAH, 5 May — A number of Saudi businessmen and officials at the chambers of commerce have called upon the authorities to undertake more studies before implementing the proposed income tax on expatriates, in order to avoid a possibly adverse impact on the Saudi economy.
Speaking to Okaz newspaper, they also urged the government to review the plan to impose a tax on foreign investors.
"Most countries which seek to promote their economies by attracting foreign investments have avoided such taxation," the paper quoted the businessmen as saying.
The consultative Shoura Council is currently discussing the new taxation law.
According to Bakri Shatta, vice president of the Shoura, the 120-member body will complete debating it within two months.
Abdul Rahman Al-Jeraisy, a prominent businessman, expressed his surprise at how the move to impose income tax had been undertaken before the views of businessmen had been taken into consideration.
"We are living in a world of intense competition. A number of neighboring 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 outside," he told the daily.
Al-Jeraisy added that businessmen and chamber officials were not consulted on the taxation issue. "There is no harm in hearing the views of businessmen," he noted.
However, Osama Kurdi, secretary-general of the Council of Saudi Chambers and a member of the Shoura Council, said the Shoura had in fact listened carefully to the views of businessmen and chamber officials.
He also sought to allay the fears of businessmen by explaining that the new law will be implemented only after the opinions of businessmen had been presented and studied.
Despite this reassurance, Abdullah Saeed Abu Milha, another businessman, echoed the views of Al-Jeraisy, by saying that taxation would have a negative impact on foreign investment in the Kingdom.
"If the new tax covers expatriate workers in the Kingdom it will negatively affect services as well as prices," he added.
Abdul Aziz Kanoo had a more balanced view. According to him, since taxation is already a reality in many countries, "if the Kingdom is seriously thinking of imposing income tax on expatriate workers and foreign investors, I don’t think it will affect the investors — especially if there is an agreement on avoiding double taxation."
Kanoo also said he believed that the government would not impose the new tax without examining the negative economic consequences of doing so that have been noted in various countries.
Businessman Khaled Al-Juffali and Dr. Majed Al-Qassabi, secretary-general of the Jeddah Chamber of Commerce and Industry, suggested that the rate of the proposed income tax should be lowest possible so as not to affect the inflow of foreign investment.
They underscored the principle of the free entry and exit of capital as one of the major mechanisms driving the Kingdom’s economy.
