"10% Tax on Expat Workers" in Saudi Arabia is a Fake News!

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Rumors circulating in social media saying that expatriate workers in the Kingdom of Saudi Arabia will be subject to 10 percent tax is not true. It is the Ministry of Labor and Social Development (MLSD)who clarified the news.

Many expat workers especially Overseas Filipino Workers (OFWs) are saddened by the FAKE NEWS saying that foreign workers in Saudi Arabia that earning more than SR3,000 a month will be subject to 10 percent tax.

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According to MLSD Spokesman Khaled Aba Al-Khail, "there is no truth in these reports. There is no intention at all to impose a new tax on expatriates.”

Rumors in social media claimed that tax will be imposed on expat workers and authorities coming from the ministries of labor, finance the Saudi Arabian Monetary Authority (SAMA) were coordinating to impose the tax.

The spokesman reiterated “Whatever social media is circulating about the new tax on expatriates is totally untrue.”

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Some Sector in Saudi, Exempted from VAT; Military Personnel to Have Monthly Allowances!

Starting January 1, 2018, five percent Value Added Tax (VAT) is already implemented in the Kingdom of Saudi Arabia, but less than a week after the implementation, King Salman announced that some of its citizens will be exempted from the VAT.

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The Custodian of the Two Holy Mosques announced that the whole government staff and military personnel will receive SR1,000 per month as a cost of living allowance. This allowance will be given for a period of one year. Military personnel serving at Yemen frontline will get a much bigger payment of SR5,000.

Aside from the allowances, Saudi civic and military personnel will be given an annual bonus starting this year. It said that the bonus should be given effective January 1, 2018.

It was Crown Prince Muhammad Bin Salman, deputy premier and minister of defense who recommends for the new allowances.

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King Salman also ordered the state to unify the disbursal of salaries to all government staff.

He also announced that some citizen groups will be receiving an allowance and will be exempted from paying VAT. This includes pensioners that will receive SR500 per month in the span of one year. The allowance will be added to their pension that being distributed by the Public Pension Agency and the General Organization for Social Insurance (GOSI).

Aside from this, King Salman also ordered 10 percent increase in stipend or allowances for Saudi students, both boys, and girls for a year.

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Also under the Royal Decree of the King, a first house bought by a Saudi citizen that will not exceed SR850,000 will be tax-exempted.

Saudi citizens who are beneficiaries of private health and private education services will b also exempted from tax. It said that the state will be the one to shoulder the tax of the above-mentioned people.

Therefore this few sector of citizens in Saudi Arabia will still enjoy the tax-free living for a while. Saudi Arabia imposes a five percent of VAT to almost all goods and services to generate income to counter the effect of decreasing oil prices.

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Iqama Number, No Longer Needed in Reloading Your Sim Card in Saudi Arabia

Iqama is one of the most important things for an expatriate worker in the Kingdom of Saudi Arabia. In almost all transactions, an Expat worker needs her or his Iqama number, be it on government or private transaction like banking or even loading your mobile phones.

But regulation that requires Iqama number in recharging Sim Cards in Saudi Arabia is now abolished after it is first implemented, five years ago.

Read: Some Women in Saudi Arabia Are Now Learning To Drive

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Today, expat workers in Saudi can recharge their prepaid sim card without entering identification card numbers.

This good news is according to Saudi Communication and Information Technology Commission (CITC) as reported by Arab News.

It was announced last November 15 and effective immediately.

Read: Salary? Things You Need to Know If You're Working in Saudi Arabia

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The goal in amending the rules is to curb or stop the spread of unidentified calling cards.

If remembered the CITC made it mandatory for prepaid SIM users to enter their Iqama numbers everytime they recharge on July 31, 2012.

Read: Saudi Arabia to Open Red Sea Luxury Resort Where Women Can Wear Bikinis?

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5 Things You Need to Know About Your Employment Contract as OFW in Saudi Arabia

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When working abroad, one of many important things you need to secure and understand is your employment contract or employment agreement.

This is a binding contract between you and your employer. Remember, it must be written and not an oral. Here, employment agreements are being addressed as long as an important aspect of your employment such as your salary, benefits, termination, obligations or duties and responsibilities of you as an employee and your employer.

Another advantage of having a contract is that this agreement can be referred to in the future, just in case there is a dispute between you and your employer.

Read: Salary? Things You Need to Know If You're Working in Saudi Arabia

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This written document can serve as evidence if needed.

Do not rush into signing your contract, but read and understand it first. Voice your concerns if you have until it's too late.

In Saudi Arabia, the following are stated in Employment Contract between a worker and employer:

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1. Entering into a Work Contract

• A work contract is a contract concluded between an employer and an employee, whereby the latter undertakes to work under the management or supervision of the former for a wage.
• The work contract shall be in duplicate, one copy to be retained by each of the two parties. However, a contract shall be deemed to exist even if not written. In this case, the employee alone may establish the contract and his entitlements arising therefrom by all methods of proof. Either party may at any time demand that the contract is in writing. As for employees of the government and public corporations, the appointment decision or order issued by the competent authority shall serve as the contract.
• Subject to Article (37) of the Labor Law, the Ministry of Labor shall issue a unified form for the work contract, which shall primarily include the name of the employer, venue, the name of the employee, nationality, identification, wage agreed upon including any benefits, date of employment and duration of the contract if fixed.
• The work contract shall be in accordance with the unified form mentioned above and the parties to the work contract may add any other articles as long as such article does not contradict with the provisions of the Labor Law, its Executive Regulation and any other decisions issued in this regard.
• The work contract for non-Saudis shall be written and of a definite term. If the contract does not specify the term, the term of the work permit shall be deemed as the duration of the contract.

2. Ending the Work Contract

A work contract shall terminate in the following cases:

• If both parties agree to terminate it, provided that the employee's consent be in writing.
• If the term specified in the contract expires unless the contract has been explicitly renewed in accordance with the provisions of Labor Law, in which case it shall remain in force until the expiration of its term.
• On the basis of the will of one of the parties to the contract in non-fixed-term contracts and in accordance with Article (75) of the Labor Law.
• The employee attains the age of retirement, which is 60 years for males and 55 years for females unless the two parties agree upon continuing work after this age. If it is a fixed-term work contract which extends beyond the retirement age, it shall terminate at the end of its term.
• Force majeure.
• The establishment is closed down permanently.
• The activity under which the employee works in is closed down unless otherwise agreed upon.
• Any other reasons stipulated by another law.
• If the contract is an indefinite term, either party may terminate it for a valid reason to be specified in a written notice to be served to the other party at least sixty days prior to the termination date if the employee is paid monthly and not less than thirty days for others.
• If the party that terminated the indefinite term work contract, did not observe the notice period set forth in Article (75) of the Labor Law, such party shall be obligated to pay the other party an amount equal to the employee's wage for the notice duration, unless the parties agreed to a higher amount.
• In the absence of a provision in the work contract specifying the amount of compensation in case of a termination of the work contract for an invalid reason, then the injured party shall be entitled to compensation in accordance with the following:

1. An amount equal to the wage of fifteen days for each year of service of the employee, if it is an indefinite term contract.

2. The amount remaining in the work contract, if it is a fixed term contract.

3. The compensation set forth in (1, 2) above should not be less than an amount equal to the employee's wage for two months.

• If the employer terminates the work contract, the employee shall be entitled, during the notice period, to be absent from work for an entire day per week or eight hours during the week in order to secure other work, the employee shall be entitled to the wages of such duration of absence. The employee shall determine the day or hours of absence, as long as notice is given to the employer at least a day preceding the absence. The employer may exempt the employee from work during the notice period, however, the notice period will be included when calculating the end of service award and the employer maintains all consequential obligations, especially the employee's entitlement to wages for such notice period.
• A work contract shall not expire by the death of the employer unless this person has been taken into consideration in concluding the contract, but shall expire with the death or incapacity of the employee in accordance with a medical report approved by the competent health authority or the authorized physician designated by the employer.

3. Work Contract Termination

An employer may not terminate the contract without an award, advance notice or indemnity except in the following cases, and provided that he gives the employee a chance to state his reasons for objecting to the termination:If, during or by reason of the work, the employee assaults the employer, the manager in-charge or any of his superiors.

• If the employee fails to perform his essential obligations arising from the work contract or to obey legitimate orders, or if, in spite of written warnings, he deliberately fails to observe the instructions related to the safety of workers and employees as may be posted by the employer in a prominent place. 
• If it is established that the employee has committed a misconduct or an act infringing on honesty or integrity. 
• If the employee deliberately commits any act or default with the intent to cause material loss to the employer, provided that the latter shall report the incident to the appropriate authorities within twenty-four hours from being aware of such occurrence. 
• If the employee resorts to forgery in order to obtain the job. 
• If the employee is hired on probation. 
• If the employee is absent without valid reason for more than thirty days in one year or for more than fifteen consecutive days, provided that the dismissal is preceded by a written warning from the employer to the employee if the latter is absent for twenty days in the first case and for ten days in the second. 
• If the employee unlawfully takes advantage of his position for personal gain. 
• If the employee discloses work-related industrial or commercial secrets.

4. Leaving Work without Notice

Without prejudice to all of his statutory rights, an employee may leave his job without notice in any of the following cases:

• If the employer fails to fulfill his essential contractual or statutory obligations towards the employee. 
• If the employer or his representative resorts to fraud at the time of contracting with respect to the work conditions and circumstances. 
• If the employer assigns the employee, without his consent, to perform a work which is essentially different from the work agreed upon and in violation of provisions of Article (60) of the Labor Law. 
• If the employer, a family member or the manager in-charge commits a violent assault or an immoral act against the employee or any of his family members. 
• If the treatment by the employer or the manager in-charge is characterized by cruelty, injustice or insult. 
• If there exists in the workplace a serious hazard threatening the safety or health of the employee, provided that the employer is aware thereof but fails to take measures indicating its removal. 
• If the employer or his representative, through his actions and particularly his unjust treatment or violation of the terms of the contract, has caused the employee to appear as the party terminating the contract.

5. The Probation Period

• If the employee was under a probation period, then such probation period shall be clearly referenced and specified in the work contract. The probation period shall not exceed more than ninety days, such period may be extended, subject to a written agreement between the parties, to a total of a hundred and eighty days. Eid Al-Feter and Al-Adha holidays, as well as sick leaves, shall not be included in the calculation of the duration period. Either party may terminate the work contract during the probation period unless the contract includes a provision giving such right exclusively to either party. The employee may not be put under a probation period more than once for the same employer. However, subject to a written agreement between the parties, the employee may be put under another probation period if it's in regard to a different job or work or if a period no less than six months have passed since the termination of the previous labor relationship between the employer and the employee. 
• If the work contract is terminated during the probation period, neither party will be entitled to a compensation nor will the employee be entitled to an end of service award.

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What Will Saudis Do Without Filipinos and Other Expatriates? A Saudi's Point of View

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In light of the recent economic and social upheaval in the Kingdom of Saudi Arabia, expats are at the wrong end of the major changes being implemented in the Kingdom. With prices of everything increasing, subsidies being reduced and increasing and new fees being collected from expats, a majority of them are contemplating life outside the Kingdom, with others feeling that the changes are aimed at getting rid of expats altogether. Yet some members of the Saudi society are voicing support for expatriates, arguing that Saudi Arabia is what is is today largely due to expatriates who helped develop the country. One of them is Tariq A. Al-Maeena, a contributor to local newspaper Saudi Gazette. Here's his Opinion on the matter.

What will happen when all the expats leave? Will we lose all our colorful diversity? Are we Saudis up to the task? Will we ever be? Very demanding questions on an untried national society that has long been accustomed to let foreigners do all the work.

With the dependent tax increasing annually, it is sure to challenge the most arduous of expats who want to stay here and keep their families and loved ones close to them. But will the increasing hit on their pockets finally take over?
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In this context, I received an interesting perspective into one potential scenario. Titled “Post 2017 readings”, it delves into what may be, what could be. Economic experts predict that the economic crisis experienced by Saudi Arabia due to the decline in international oil prices and the war in the region will cause huge changes in the population structure in the Kingdom. The most important of these is the departure of two million foreigners by the first quarter of 2018, who cannot cope with the large fees imposed by the Kingdom on foreign dependents.

Some 2.5 million foreigners are expected to leave by the end of 2018, most of them single-family workers, who will find it difficult to cope with the cost of living. Other fees and taxes that the state may seek to impose on them will be raised simultaneously with subsidies on fuel, electricity, cooking gas, bread, baby milk and medicines. With the beginning of July 2019, the majority of foreigners remaining in the Kingdom will be those with high salaries and families of not more than four members.

Of course, this reverse migration will affect several commercial sectors in the Kingdom, the first of which are the companies involved with nutrition and catering, some of which may collapse completely if they cannot withstand the economic shock in the first two years (2017-2018).

The impact from the first half of 2018 will be on the real estate market and rents are expected to fall to 50 percent from now or less, followed by transport and relocation companies, airlines, construction companies and car dealerships.

The impact of the economic situation will not be limited to foreign expatriates but will extend to Saudi families themselves, who will seek to transfer their children from private schools to public schools to reduce costs, look for cheaper housing with less advantages, or move from villas to apartments. There will also be a stockpile of new vehicles in the agencies, the used car market will rebound and prices will fall.

Read: Saudis Start to Feel Negative Impact of Expat Fees

The impact of the crisis at the end of 2018 will extend to the electronics, smartphones, tablets, computers, luxury, service, maintenance and operation sectors. Hundreds of companies and institutions will be forced to withdraw from the market and close. This will lead to an increase in the pace of foreigners leaving and ending their contracts.

At the beginning of 2019, foreigners will not be able to afford high electricity, water and gasoline bills. They will be subsidized for citizens only. Foreigners will look for exits and solutions such as renting homes with Saudis or transferring ownership of their cars to citizens. Dozens and perhaps hundreds of branches of foreign private restaurants and shops will be closed with depressed markets and fewer customers.

By the end of 2019, consumers are expected to buy more used phones, petty crime and domestic problems will rise, and the number of Saudi women working in businesses will increase.

Read: OFW Nabbed in Riyadh For Human Trafficking

People will begin to partially adjust to the situation by the beginning of 2020 and Saudis will have to work in a lot in areas and activities they have never worked in. There will be a huge gap between the market and the consumer.

This is but one perspective, yet one that borders on reality given the current projections. I have often been asked what I would do differently. My answer? Allow long-term and worthy expats to apply for citizenship or grant them permanent residency. The colorful diversity and economic muscle of this society would be greatly enhanced.

- Tariq A. Al-Maeena, Saudi Gazette

It is interesting to note that this country was built with the help of foreign workers. And now that the Kingdom is near collapse, it is the expats that are first to be crushed under the heavy weight of reforms. One's hope is only lifted high by our Saudi friends like Tariq Al-Maeena, who sees the great contribution that expats gave for this country.

Source: Saudi Gazette

This article is filed under: Saudi Arabia, OFW in Saudi Arabia

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