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Saudi private expat businesses on hold as new laws hit in
| Published: | 17 Sep at 6 PM |
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Tagged: Australia
As the swathe of new laws introduced in Saudi Arabia kicks in, many expat-owned businesses have been put on hold for fear of punitive action by the authorities.
The majority of businesses on hold are privately owned by foreigners who run small enterprises as well as working for their sponsors. The practice has been widespread in the kingdom, with mobile shops, computer maintenance outfits and advertising agencies opening up to give their owners an increased income.
Remittances to overseas locations of around SR109 billion have been sent during the current year as a result of the practice, but new government laws now state that expats are only allowed to work for their sponsors. Saudi banks are now monitoring expat accounts in order to trace sources of income, and transfers over and above those considered appropriate for the client’s average income will be disallowed.
According to a report by the World Bank, Saudi Arabia is third globally in the list of remittance volumes to developing countries, and tops the list in the Arab world. Expats are citing artificially low salaries being paid by sponsors as the reason behind the necessity to start up other commercial ventures.
Head of the Media and Banking Awareness Committee of Saudi Banks Tallat Hafuz has confirmed that expats without permission to work will not now be allowed to open bank accounts. He added that, if irregular activity is suspected, the police will be called in to investigate.
In the kingdom, private companies use direct transfers to a designated bank account to pay their employees, but banks have noted that a high number of expats have two accounts, one for their regular salary and a second for possibly unauthorised deposits. Around four million requests for second bank accounts for expats working in the private sector have been received.
The majority of businesses on hold are privately owned by foreigners who run small enterprises as well as working for their sponsors. The practice has been widespread in the kingdom, with mobile shops, computer maintenance outfits and advertising agencies opening up to give their owners an increased income.
Remittances to overseas locations of around SR109 billion have been sent during the current year as a result of the practice, but new government laws now state that expats are only allowed to work for their sponsors. Saudi banks are now monitoring expat accounts in order to trace sources of income, and transfers over and above those considered appropriate for the client’s average income will be disallowed.
According to a report by the World Bank, Saudi Arabia is third globally in the list of remittance volumes to developing countries, and tops the list in the Arab world. Expats are citing artificially low salaries being paid by sponsors as the reason behind the necessity to start up other commercial ventures.
Head of the Media and Banking Awareness Committee of Saudi Banks Tallat Hafuz has confirmed that expats without permission to work will not now be allowed to open bank accounts. He added that, if irregular activity is suspected, the police will be called in to investigate.
In the kingdom, private companies use direct transfers to a designated bank account to pay their employees, but banks have noted that a high number of expats have two accounts, one for their regular salary and a second for possibly unauthorised deposits. Around four million requests for second bank accounts for expats working in the private sector have been received.
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