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Saudi Arabia to tax Dependents of Expats, OFWs

The tax is part of the Kingdom's plan to cut its budget deficit resulting from the drop in oil prices which is expected to continue despite a slight increase after OPEC announced cuts in oil production. The US has increased its production and some OPEC members have not complied.



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Saudi Arabia to tax Dependents of Expats, OFWs
Written by Crispin Aranda.
Updated January 10, 2017

As Saudi oil loses its weight in gold, Expats -including OFWs - see the silver lining of their Middle East employment tarnished. 

In 2015, the Philippine Overseas and Employment Administration (POEA) reported a 2.30% decrease in the number of OFWs (new hires) sent to Saudi Arabia – from 193,457 in 2014 to only 189,001 in 2015.

This was the first time since June 2011 when the Saudization policy was reiterated requiring all Saudi companies to fill up their workforce with Saudis instead of recruiting foreign workers.

Saudization had been set since 2005, the goal requiring the private sector to have at least 75% of its workforce to be Saudi nationals. This goal was not met because most Saudis are not interested in working jobs requiring manual labor.  The Kindgom provides subsidies to nationals hence there is really no incentive for them to take up the jobs that OFWs are contracted for.

In 2014 the Saudi Gazette reported that the kingdom's plan-- to "bring down the unemployment rate to 5.5 percent and revive the Saudization strategy"—had not been realized.

Last month, Saudi Arabia released its 2017 budget aimed at achieving the goal by reducing subsidies to nationals and imposing fees on Expats (OFWs) who have dependents.

TIME TO LEAVE THE KINGDOM?

With the proposed fees that Expats (including OFWs) must pay for their dependents, will OFWs opt to be in Saudi Arabia alone (leaving family and dependents in the Philippines to avoid the expat fees for dependents) or will they now consider leaving KSA and use their talents and experience to migrate elsewhere – to Canada, Australia or New Zealand where they could be together as a family with higher income and better quality of life?

About the Author

Crispin Aranda

Crispin Aranda

Crispin R. Aranda is an established International Visa Conselor and Immigrant Advocate. He is the president of IVC and is in several migration radio programs.

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