Riyadh (Online): Saudi Arabia has decided to impose 2 – 6 percent tax on huge amount of remittances sent by expats in Saudi kingdom every year.
Shura council of Saudia revealed that a 6% tax to be effective initially on all remittance sent by the expats for the first year. If the non-resident has been staying for 5 years or more in the country, the tax on remittance will be reduced to 2%.
The policy is also to apply to Pakistani expats staying in Saudi Arabia as well, and has the potential to cut the amount of remittances sent through official channels by Pakistanis to their family at home significantly.
After imposing this policy Saudi Arabia happens to be the second highest in remittance sending countries in the world.
Former Shura council member Husam Al Angari who submitted the proposal was quoted saying that remittances have tripled since 2004. They stood at $15.1 billion in 2004 which increased to over $36 billion by 2013.
On the other hand, the World Bank (WB) claims that Saudi Arabia sent remittances of around $37 billion in 2015. Both Al Angari and World Bank’s statements are similar about Saudi Arabia being the second highest remitting country in the world after US.
The action taken might be to decrease the reliance on revenues earned through oil by Saudi Arabia and shift to other means of finance.
After Saudi Arabia, UAE was also to consider the imposition of such tax on remittances as well.