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Report states many Saudi companies have paid expat tax
| Published: | 13 Dec at 6 PM |
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According to a recent report, some 30 per cent of Saudi private companies have been forced to pay the recently-imposed levee on foreign workers.
As the controversy over the Ministry of Labour’s highly unpopular Saudization tax rumbles on, a report in the Arab News estimates that a third of private sector firms in the kingdom have already caved in and paid up. The report also suggests that a number of companies are falsifying their staff records to avoid being downgraded and forced to sign a stipulation that they will change their hiring patterns.
The new law took effect on 15 November, establishing a Saudization quota of more local workers than expats, with firms unable or unwilling to comply forced to pay a tax of SAR2,400 for each extra expat employee. Saudi Arabia is struggling unsuccessfully to create huge numbers of public sector jobs, with the new law aiming to create a reduced foreign workforce in the country giving more jobs for Saudi nationals.
The measure has attracted fierce criticism from foreign companies operating in the kingdom, as well as from Saudi Arabia’s Shoura Council, who have stated that the Ministry of Labour has no remit to pass laws on company hiring practices. The Shoura Council is responsible for submitting new legislation to the Saudi king for approval.
Ahmed al Dhaylia, a Council member, stated last week that the measure can only aggravate the Saudization scheme, rather than solving its problems. Previously, a number of contracting companies based in the kingdom were reported to have refused compliance with the new rule.
As the controversy over the Ministry of Labour’s highly unpopular Saudization tax rumbles on, a report in the Arab News estimates that a third of private sector firms in the kingdom have already caved in and paid up. The report also suggests that a number of companies are falsifying their staff records to avoid being downgraded and forced to sign a stipulation that they will change their hiring patterns.
The new law took effect on 15 November, establishing a Saudization quota of more local workers than expats, with firms unable or unwilling to comply forced to pay a tax of SAR2,400 for each extra expat employee. Saudi Arabia is struggling unsuccessfully to create huge numbers of public sector jobs, with the new law aiming to create a reduced foreign workforce in the country giving more jobs for Saudi nationals.
The measure has attracted fierce criticism from foreign companies operating in the kingdom, as well as from Saudi Arabia’s Shoura Council, who have stated that the Ministry of Labour has no remit to pass laws on company hiring practices. The Shoura Council is responsible for submitting new legislation to the Saudi king for approval.
Ahmed al Dhaylia, a Council member, stated last week that the measure can only aggravate the Saudization scheme, rather than solving its problems. Previously, a number of contracting companies based in the kingdom were reported to have refused compliance with the new rule.
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