Saudi Arabia considering fee revision for skilled expats’ dependents

Minister of Finance Mohammed Al-Jadaan. File/AFP

• No plans to reduce VAT from current 15%, says minister

RIYADH: Skilled expatriates in Saudi Arabia could benefit from potential revisions to dependent fees as the government aims to enhance their stability and productivity, said a senior minister.

Since 2020, every expat worker in Saudi Arabia is required to pay SR400 ($100.6) for each dependent.

In his interview with the Socrates podcast, Minister of Finance Mohammed Al-Jadaan disclosed that a study is presently in progress to re-evaluate the fee imposed by the country on foreign workers as part of its plan to attract talented individuals.

Al-Jadaan explained that imposing the dependent fee — initially SR100 in 2017 before being increased each year — was based on an economic study, considering the consumption patterns of approximately 2 million people benefiting from subsidized services provided by the state.

“When you consider their consumption habits, it becomes apparent that these individuals primarily rely on goods imported from abroad. Consequently, the earnings they generate often flow out of Saudi Arabia. However, the dynamics have shifted recently with the reduction of subsidies on certain products. Additionally, the Citizen’s Account Program has been more effectively targeting those in greater need, aiming to alleviate the financial strain caused by rising service costs,” he explained.

The finance minister pointed out that if the revenue generated from expatriates increases, the fees should be re-examined.

“The ongoing examination of potential fee adjustments for dependents is part of a broader strategy aimed at attracting and retaining highly skilled individuals as providing them with social stability is crucial to ensuring their productivity and meaningful contribution,” he said.

This strategic approach, Al-Jadaan added, not only enhances individual well-being but also pours into the overall economy,” the minister said.

Addressing the implementation of value-added tax, Al-Jadaan said that the country’s financial policy had to go with the regional policies in this regard. He added that VAT was used to help the less fortunate people through the Citizen’s Account Program.

Al-Jadaan added that when the tax rate reached 15 percent and energy prices, particularly for car fuel, surged, the payment structure of the program was consequently reassessed, leading to an increase in the minimum limit.

He, however, said that there are no plans to reduce VAT from the current rate of 15 percent.

The minister also emphasized that financial policies are typically formulated based on prevailing economic circumstances.

“You either increase taxes or reduce expenditures, or vice versa. Then, you measure the economic and social impact, and you try to find solutions to the social impact through other initiatives, like what we did when we increased the allocations for the social security by 20 percent, and the extension and increase of the Citizen’s Account Program to properly face these social impacts,” he said.

Regarding the extent of Saudi Arabia’s success in diversifying its economy and government revenues, the minister emphasized the importance of achieving both objectives simultaneously. He noted significant progress in income diversification, citing a notable increase in non-oil revenues from SR79 billion to an estimated SR440 billion over recent years, describing it as a substantial leap forward.

He also highlighted the remarkable phase of economic diversification, noting a significant expansion in the sectors contributing to the gross domestic product. “In contrast to previous years when only a few sectors contributed, there are now eight or nine major sectors contributing between 5 to 12 percent each. This diversification marks the beginning of a promising journey for the Saudi economy,” he said.