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Showing posts with label VAT. Show all posts
Showing posts with label VAT. Show all posts

Monday, January 08, 2018

11 Saudi Princes, Arrested For Protesting Against Gov't Subsidy's Cut to Their Electricity and Water Bills

For many times, Saudi Arabia is proving that the Kingdom is not tolerating people even members or Royal family in their wrongdoings or act of crime. Just recently, 11 Saudi princes are arrested and put into prison for holding an anti-austerity protest. In his statement, Attorney General Sheikh Saud Al-Mujib said the group gathers themselves in a Royal Palace in Riyadh to protest state's decision to stop paying the water and energy bills of royals.
For many times, Saudi Arabia is proving that the Kingdom is not tolerating people even members or Royal family in their wrongdoings or act of crime.

Just recently, 11 Saudi princes are arrested and put into prison for holding an anti-austerity protest. In his statement, Attorney General Sheikh Saud Al-Mujib said the group gathers themselves in a Royal Palace in Riyadh to protest state's decision to stop paying the water and energy bills of royals.


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After being informed that their demands to be exempted from paying the bills were rejected, the princes refused to leave the palace and, hence, the Royal Guard was ordered to intervene and detain them.

They are also demanding financial compensation after one of their cousins was given the death sentence for the unspecified crime.

In the statement it said, the princes were informed about the violation, but they refused to leave the site. Because of this, a Royal directive was issued to arrest them and being sent to Al-Hair prison while waiting for their trial.



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The statement said, “We emphasize here that the royal directives are clear that all citizens are equal before the law, and those who fail to abide by the regulations and instructions will be held accountable whoever they are,” 

King Salman make sure that members of royal families will be held equally accountable before the law. He even approved the beheading of a prince that killed a member of the public.

Last year dozens of princes, as well as sitting ministers and ex-ministers, were arrested as part of an anti-corruption drive.
The number or Saudi Royal family are thousands but their wealth and status differentiate with each other.
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Wednesday, January 03, 2018

Taxi Fares and Food Products Are Now Increasing in Saudi Arabia

For many decades, Overseas Filipino Workers (OFW) are enjoying tax-free living in Saudi Arabia. But this 2018 tax-free living comes to an end after 5% Value Added Tax (VAT) has been added to many products and services. And even though OFW and other expatriate working in Saudi Arabia can enjoy tax-free remittances, OFWs are not spared on VAT imposition on food products, such as vegetables and fruits, dairy products. Electric bill is also increasing up to threefold while taxi fares are rising due to the implementation of VAT and hike in fuel prices.

For many decades, Overseas Filipino Workers (OFW) are enjoying tax-free living in Saudi Arabia. But this 2018 tax-free living comes to an end after 5% Value Added Tax (VAT) has been added to many products and services. 

And even though OFW and other expatriate working in Saudi Arabia can enjoy tax-free remittances, OFWs are not spared on VAT imposition on food products, such as vegetables and fruits, dairy products. Electric bill is also increasing up to threefold while taxi fares are rising due to the implementation of VAT and hike in fuel prices.
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According to Mohammed Al-Johani, deputy chairman of the Committee on Foodstuff at the Jeddah Chamber of Commerce and Industry (JCCI), 30%-40% increase is expected at the prices of fruits, vegetable, and dairy products.

Aside from this, there is also an increase in transportation fares, private school tuition fees, and school bus charges. This is the domino effect of VAT imposition and hike in fuel prices.

In Saudi Gazette News, Abdullah Al-Asmari, a taxi driver said that a trip coasting SR35 will now cost SR 45 or even SR 60.
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Careem smart application car company has already announced their new fare hike after new fuel prices that increased between 82.66% and 126.66%.”

It said that the entire transport sector in Saudi Arabia is affected by the new fuel prices.

Earlier the Council of Minister decided to implement the price hike of petroleum and fuel based-product such as kerosene and diesel.

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From SR 0.90 per liter, the Unleaded or Higher Grade Petrol is now SR 2.04 per liter with an increase of 127%. Meanwhile, the 83% is recorded in low-grade petroleum with new prices of SR 1.37 per liter.

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Monday, January 01, 2018

Saudi Arabia, UAE Starts Vat Implementation


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Saudi Arabia and the United Arab Emirates introduced value-added tax starting January 1, a first for the Gulf which has long stood up without implementing taxes.
Saudi Arabia started the New Year blow for motorists with an unannounced  immediate hike of up to 127% in petrol prices.


They are the latest in a series of measures introduced by Gulf oil producers over the past 2 years boosting revenues and cutting expenditures as a persistent slump in world prices which led to swollen budget deficits.

The 5% sales tax applies to most goods and services. Analysts project that the two governments could raise as much as $21 billion in 2018, equivalent to 2.0 % of GDP.
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The other four Gulf states -- Bahrain, Kuwait, Oman and Qatar -- are also committed to follow VAT introduction expected to commence early 2019.

The Gulf states did not levy any personal income tax nor planning to do so.

The International Monetary Fund has repeatedly urged Gulf states to diversify their revenues away from oil, which accounts for more than 90 percent of the Saudi budget and 80 percent in the UAE.

Both Saudi arabia and the United Arab Emirates directed all companies earning $100,000 or more per annum to register in the VAT system.

VAT returns in the UAE will be used "for infrastructure development ... (to) upgrade public services ... and boost UAE economy competitiveness."

High-grade petrol rose 127% from 24 cents per liter($1.09/gallon) to 54 ($2.46), while low-grade petrol rose 83 percent from 20 cents per liter (91 cents/gallon) to 36.5 ($1.66).
Taxes on diesel and kerosene remained as is.

The introduction of VAT coupled with the increase in fuel duty is expected to bring an abrupt end to a year of negative inflation in Saudi Arabia.

Riyadh-based Jadwa Investment predictions said that inflation could reach as much as 5% after the implementation of the VAT.
The new sales tax draws sarcastic reactions on social media

"They are even taking taxes on car parking. I am afraid they will next tax the air," wrote Ahmed bin Fatima.

Riyadh posted budget deficits summed up to $260 billion over the past four years and does not expect to balance its books before 2023.

, The kingdom has withdrawn around $250 billion from its reserves over the past four years, reducing them to $490 billion to finance its mounting public debt. 

 $100 billion has also been borrowed by Saudi Arabia from the international and domestic markets.

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Monday, December 18, 2017

No VAT On Expat Remittances in Saudi Arabia— Bankers


There has been a clarification from the bankers in saudi arabia that there will be no VAT for the money that will be sent to their families by expats in the kingdom. Under the new VAT reform initiative set to be launched on January 1, 2018 by the government of Saudi Arabia. Senior bankers clarified on Sunday that VAT will be implemented on the cash remittance charges and not on the to tal amount of the remittance. Saudi Arabia’s General Authority for Zakat and Income Tax (GAZT) has urged businesses with annual revenues of more than SR1 million ($266,640) to register for VAT before the deadline of Dec. 20, 2017. “The deadlines for companies with annual revenues between SR1 million and SR375,000, however, has been extended by a year until Dec. 20, 2018,” according to a GAZT statement. “All businesses including commercial organizations and banks have been advised to make sure they understand the VAT rules and be ready for their implementation after 15 days from now,” said Syed Ahmed Ziauddin, a senior banker who heads the financial institutions and public sector group at Bank Al-Jazirah in Riyadh. He said: “Aljazirah Bank is fully ready to start from Jan. 1 ... and we are going to apply VAT on our service charges.” Sponsored Links He said that all commercial banks have geared themselves to comply with the VAT regulations. “The banks have also educated their customers about VAT besides advising them about various services that will come under the purview of VAT,” said Ziauddin, while adding that the remittances will not be taxed under the VAT system. “Money remittance outflows will be exempted,” said Abdullah Ali Nasser Alfuraiji, chief of the Tahweel Al-Rajhi in Riyadh. Alfuraiji made it clear that “the 5 percent VAT tax would be levied on the remittance service fees, rather than the remittances themselves. He emphasized that “Tahweel will be charging 5 percent of SR18, which we charge as remittance fee for sending funds to India. Hence, the rise will be nominal with customers required to pay 9 halalas extra for remitting money to India.” The Tahweel chief added that this will be negligible, but will differ from country to country. Referring to the implementation of the VAT and the levies imposed on remittances, Ahmed Mohammed Al Enazi, general manager of Enjaz Banking Services, the remittance arm of Bank Albilad, said: “There will not be any impact on remittances.” He also confirmed that “5 percent VAT will be imposed on service charges... say like 5 percent of SR16 in case of India and 5 percent of SR20 in case of Pakistan.” “The 5 percent on banks’ service fees will be paid by the person sending money as per guidelines of the General Authority of Zakat and Tax (GAZT),” said Ahmed. Banks and remittance centers in the Kingdom charge varying fees on remittances sent to different Asian and European countries. The imposition of 5 percent VAT “on service charges, not on remittance amounts” was also confirmed by Anwar Ahmed Wajid Khajja, manager of products and partners at Fawri, the remittance wing of Bank Aljazirah in Riyadh. Referring to the benefits of VAT especially those collected by banks and remittance centers, Cenon Nonie C. Sagadal Jr., marketing representative of Rizal Commercial Banking Corporation (RCBC) of the Philippines, said: “VAT is a welcome move with a slight increase in remittance fees, which will eventually benefit the remitters and the institutions. “With the government meeting its financial goals as a result of VAT collection, more employment opportunities will be created not only for Saudis but also for expatriates within the framework of the Saudi Vision 2030.” Source: Arab News Advertisement Read More: ©2017 THOUGHTSKOTO www.jbsolis.com
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There has been a clarification from the bankers in Saudi Arabia that there will be no VAT for the money that will be sent to their families by expats in the kingdom. Under the new VAT reform initiative set to be launched on January 1, 2018 by the government of Saudi Arabia.
Senior bankers clarified on Sunday that VAT will be implemented on the cash remittance charges and not on the total amount of the remittance.

“Money remittance outflows will be exempted,” said Abdullah Ali Nasser Alfuraiji, chief of the Tahweel Al-Rajhi in Riyadh. Alfuraiji reiterated that “the 5 percent VAT tax would be levied on the remittance service fees, rather than the remittances themselves.
He emphasized that “Tahweel will be charging 5 percent of SR18, which we charge as remittance fee for sending funds to India. Hence, the rise will be nominal with customers required to pay 9 halalas extra for remitting money to India.”

Referring to the implementation of the VAT and the levies imposed on remittances, Ahmed Mohammed Al Enazi, general manager of Enjaz Banking Services, the remittance arm of Bank Albilad, said: “There will not be any impact on remittances.” He also confirmed that “5 percent VAT will be imposed on service charges... say like 5 percent of SR16 in case of India and 5 percent of SR20 in case of Pakistan.”
“The 5 percent on banks’ service fees will be paid by the person sending money as per guidelines of the General Authority of Zakat and Tax (GAZT),” said Ahmed.
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Banks and remittance centers in Saudi Arabia charge varying fees on remittances sent to different Asian and European countries.
Anwar Ahmed Wajid Khajja, manager of products and partners at Fawri, the remittance wing of Bank Aljazirah in Riyadh also confirmed the imposition of 5 percent VAT “on service charges, not on remittance amounts.”Cenon Nonie C. Sagadal Jr., marketing representative of Rizal Commercial Banking Corporation (RCBC) of the Philippines, said that “VAT is a welcome move with a slight increase in remittance fees, which will eventually benefit the remitters and the institutions.

 “With the government meeting its financial goals as a result of VAT collection, more employment opportunities will be created not only for Saudis but also for expatriates within the framework of the Saudi Vision 2030.”
Source: Arab News

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Thursday, November 09, 2017

Saudi Arabia Will Have 5% TAX on Money Transfer Fee


Money transfer charges will increase from Jan. 1 as 5% Value Added Tax (VAT) will be levied on money transfer fees, according to the General Authority of Zakat and Tax (GAZT), which is responsible for managing the implementation, administration and enforcement of VAT in Saudi Arabia in close coordination with other relevant entities. Advertisements The 5% VAT will be on the money transfer fee and not on the transfer amount, GAZT clarified, adding that VAT will be paid by the person sending money. However, many financial services will be exempt from VAT. These include several transactions and services such as interest on loans, lending fees charged with an implicit margin such as loans and credit cards, mortgages, financial leasing, transactions involving money and securities, as well as current, deposit and savings accounts. Other exempted services include life insurance policies. Registered businesses conducting economic activities are subject to VAT, but registered businesses conducting VAT-exempted economic activities are not entitled to deduct VAT. Sponsored Links The nature of economic activities will determine whether VAT should be levied on these or not. House rent and medicines are among some of the facilities and commodities exempted from Value Added Tax (VAT). VAT will be implemented in the Kingdom from Jan. 1 2018. No VAT will be levied on passport and driving license issuance and renewal fees. No VAT will apply on exports to countries outside the Gulf Cooperation Council, services given to non-residents of GCC countries, international transport services for goods and passengers, import of spare parts of qualified means of international transport and their maintenance, repair and modifications. Source: Saudi Gazzete Money transfer charges will increase from Jan. 1 as 5% Value Added Tax (VAT) will be levied on money transfer fees, according to the General Authority of Zakat and Tax (GAZT), which is responsible for managing the implementation, administration and enforcement of VAT in Saudi Arabia in close coordination with other relevant entities. Advertisements The 5% VAT will be on the money transfer fee and not on the transfer amount, GAZT clarified, adding that VAT will be paid by the person sending money. However, many financial services will be exempt from VAT. These include several transactions and services such as interest on loans, lending fees charged with an implicit margin such as loans and credit cards, mortgages, financial leasing, transactions involving money and securities, as well as current, deposit and savings accounts. Other exempted services include life insurance policies. Registered businesses conducting economic activities are subject to VAT, but registered businesses conducting VAT-exempted economic activities are not entitled to deduct VAT. Sponsored Links The nature of economic activities will determine whether VAT should be levied on these or not. House rent and medicines are among some of the facilities and commodities exempted from Value Added Tax (VAT). VAT will be implemented in the Kingdom from Jan. 1 2018. No VAT will be levied on passport and driving license issuance and renewal fees. No VAT will apply on exports to countries outside the Gulf Cooperation Council, services given to non-residents of GCC countries, international transport services for goods and passengers, import of spare parts of qualified means of international transport and their maintenance, repair and modifications. Source: Saudi Gazzete


  Starting January 1, 2018, money transfer charges will increase  as 5% Value Added Tax (VAT) will be levied on money transfer fees, according to the General Authority of Zakat and Tax (GAZT), the government branch responsible for managing the implementation, administration and enforcement of VAT in Saudi Arabia.
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The 5% VAT will be on the money transfer fee and not on the principal amount of the money to be transferred, GAZT clarified, adding that  the person who is sending the money will pay the VAT.

 However, many financial services will be exempt from VAT such as several transactions and services like interest on loans, lending fees charged with an implicit margin such as loans and credit cards, mortgages, financial leasing, transactions involving money and securities, as well as current, deposit and savings accounts.
Money transfer charges will increase from Jan. 1 as 5% Value Added Tax (VAT) will be levied on money transfer fees, according to the General Authority of Zakat and Tax (GAZT), which is responsible for managing the implementation, administration and enforcement of VAT in Saudi Arabia in close coordination with other relevant entities. Advertisements The 5% VAT will be on the money transfer fee and not on the transfer amount, GAZT clarified, adding that VAT will be paid by the person sending money. However, many financial services will be exempt from VAT. These include several transactions and services such as interest on loans, lending fees charged with an implicit margin such as loans and credit cards, mortgages, financial leasing, transactions involving money and securities, as well as current, deposit and savings accounts. Other exempted services include life insurance policies. Registered businesses conducting economic activities are subject to VAT, but registered businesses conducting VAT-exempted economic activities are not entitled to deduct VAT. Sponsored Links The nature of economic activities will determine whether VAT should be levied on these or not. House rent and medicines are among some of the facilities and commodities exempted from Value Added Tax (VAT). VAT will be implemented in the Kingdom from Jan. 1 2018. No VAT will be levied on passport and driving license issuance and renewal fees. No VAT will apply on exports to countries outside the Gulf Cooperation Council, services given to non-residents of GCC countries, international transport services for goods and passengers, import of spare parts of qualified means of international transport and their maintenance, repair and modifications. Source: Saudi Gazzete Money transfer charges will increase from Jan. 1 as 5% Value Added Tax (VAT) will be levied on money transfer fees, according to the General Authority of Zakat and Tax (GAZT), which is responsible for managing the implementation, administration and enforcement of VAT in Saudi Arabia in close coordination with other relevant entities. Advertisements The 5% VAT will be on the money transfer fee and not on the transfer amount, GAZT clarified, adding that VAT will be paid by the person sending money. However, many financial services will be exempt from VAT. These include several transactions and services such as interest on loans, lending fees charged with an implicit margin such as loans and credit cards, mortgages, financial leasing, transactions involving money and securities, as well as current, deposit and savings accounts. Other exempted services include life insurance policies. Registered businesses conducting economic activities are subject to VAT, but registered businesses conducting VAT-exempted economic activities are not entitled to deduct VAT. Sponsored Links The nature of economic activities will determine whether VAT should be levied on these or not. House rent and medicines are among some of the facilities and commodities exempted from Value Added Tax (VAT). VAT will be implemented in the Kingdom from Jan. 1 2018. No VAT will be levied on passport and driving license issuance and renewal fees. No VAT will apply on exports to countries outside the Gulf Cooperation Council, services given to non-residents of GCC countries, international transport services for goods and passengers, import of spare parts of qualified means of international transport and their maintenance, repair and modifications. Source: Saudi Gazzete Advertisement Read More: ©2017 THOUGHTSKOTO
Life insurance policies will also be exempted.
Registered businesses conducting economic activities are subject to VAT. However, businesses conducting VAT-exempted economic activities are not entitled to deduct VAT.
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 The determining factor whether VAT should be levied on these or not will be the nature of economic activities.
House rent and medicines are exempted from Value Added Tax (VAT) as well.
 Passport and driving license issuance and renewal fees will be exempted to vat.
Exports to countries outside the Gulf Cooperation Council, services given to non-residents of GCC countries, international transport services for goods and passengers, import of spare parts of qualified means of international transport and their maintenance, repair and modifications will also not be subjected to VAT.
Source: Saudi Gazzete
Money transfer charges will increase from Jan. 1 as 5% Value Added Tax (VAT) will be levied on money transfer fees, according to the General Authority of Zakat and Tax (GAZT), which is responsible for managing the implementation, administration and enforcement of VAT in Saudi Arabia in close coordination with other relevant entities. Advertisements The 5% VAT will be on the money transfer fee and not on the transfer amount, GAZT clarified, adding that VAT will be paid by the person sending money. However, many financial services will be exempt from VAT. These include several transactions and services such as interest on loans, lending fees charged with an implicit margin such as loans and credit cards, mortgages, financial leasing, transactions involving money and securities, as well as current, deposit and savings accounts. Other exempted services include life insurance policies. Registered businesses conducting economic activities are subject to VAT, but registered businesses conducting VAT-exempted economic activities are not entitled to deduct VAT. Sponsored Links The nature of economic activities will determine whether VAT should be levied on these or not. House rent and medicines are among some of the facilities and commodities exempted from Value Added Tax (VAT). VAT will be implemented in the Kingdom from Jan. 1 2018. No VAT will be levied on passport and driving license issuance and renewal fees. No VAT will apply on exports to countries outside the Gulf Cooperation Council, services given to non-residents of GCC countries, international transport services for goods and passengers, import of spare parts of qualified means of international transport and their maintenance, repair and modifications. Source: Saudi Gazzete

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Thursday, August 24, 2017

UAE to Implement Sin Taxes in October

The cost of living in the UAE is about to increase in a few weeks. Starting October 1, the price of some selected items will increase by as much as 100 percent, or double. The UAE’s tax authority announced that a 50 per cent tax would be imposed on carbonated drinks, while energy drinks and tobacco products would attract a 100 percent tax. Carbonated water is exempt from the carbonated drinks tax. The prices of excise goods at points of sale - groceries and stores - must include the Excise Tax. Duty Free purchases at airports will also be exempt from the tax, as long as passengers are leaving the UAE. Passengers who purchase duty free items as they arrive in the UAE will be taxed. UAE's Tax announcement comes just two months since Saudi Arabia imposed SIN TAXES on similar items with similar price increases in June. President of the UAE Sheikh Khalifa bin Zayed Al Nahyan approved the Federal Decree-Law on Excise Tax last Monday, imposing excise taxes to products that are deemed unhealthy. The plan to tax products that are detrimental to health has been in place for some time now. The government hopes people will cut down on sugary products following this tax. The UAE government also hopes the new excise taxes will help boost revenue and help offset the impact of lower oil prices. The gradual introduction of such taxes is part of a region-wide effort in the Gulf to diversify revenue streams away from oil. The tax is expected to generate up to around Dh7 billion in annual revenues for the Federal Budget. They also believe, the move will reduce health costs for thousands of residents in the Emirates due to medical costs of obesity. Additional products may be taxed in the future at rates of up to 200 per cent, but as of now it is just energy drinks, fizzy drinks, and tobacco. Experts say the new taxes on tobacco products and carbonated drinks will have an impact on the industry. They predict that the impact on the sale of fizzy and energy drinks would be swift and severe. “Sales will plummet as a result of the tax, because people have a choice. If carbonated drinks are much more expensive, then people will just opt for water,” said one analyst. This is just the beginning. Like other GCC states, UAE is also set to introduce VAT for the first time in its history. A 5% tax will be implemented starting January 2018. Of course, some basic goods are VAT exempt, but UAE, especially Dubai and Abu Dhabi, is known as a haven for luxury goods. sources: Washington Post, GulfNews

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The cost of living in the UAE is about to increase in a few weeks. Starting  October 1, the price of some selected items will increase by as much as 100 percent, or double.


The UAE’s tax authority announced that a 50 per cent tax would be imposed on carbonated drinks, while energy drinks and tobacco products would attract a 100 percent tax. Carbonated water is exempt from the carbonated drinks tax. The prices of excise goods at points of sale - groceries and stores - must include the Excise Tax.

Duty Free purchases at airports will also be exempt from the tax, as long as passengers are leaving the UAE. Passengers who purchase duty free items as they arrive in the UAE will be taxed.
The cost of living in the UAE is about to increase in a few weeks. Starting October 1, the price of some selected items will increase by as much as 100 percent, or double. The UAE’s tax authority announced that a 50 per cent tax would be imposed on carbonated drinks, while energy drinks and tobacco products would attract a 100 percent tax. Carbonated water is exempt from the carbonated drinks tax. The prices of excise goods at points of sale - groceries and stores - must include the Excise Tax. Duty Free purchases at airports will also be exempt from the tax, as long as passengers are leaving the UAE. Passengers who purchase duty free items as they arrive in the UAE will be taxed. UAE's Tax announcement comes just two months since Saudi Arabia imposed SIN TAXES on similar items with similar price increases in June. President of the UAE Sheikh Khalifa bin Zayed Al Nahyan approved the Federal Decree-Law on Excise Tax last Monday, imposing excise taxes to products that are deemed unhealthy. The plan to tax products that are detrimental to health has been in place for some time now. The government hopes people will cut down on sugary products following this tax. The UAE government also hopes the new excise taxes will help boost revenue and help offset the impact of lower oil prices. The gradual introduction of such taxes is part of a region-wide effort in the Gulf to diversify revenue streams away from oil. The tax is expected to generate up to around Dh7 billion in annual revenues for the Federal Budget. They also believe, the move will reduce health costs for thousands of residents in the Emirates due to medical costs of obesity. Additional products may be taxed in the future at rates of up to 200 per cent, but as of now it is just energy drinks, fizzy drinks, and tobacco. Experts say the new taxes on tobacco products and carbonated drinks will have an impact on the industry. They predict that the impact on the sale of fizzy and energy drinks would be swift and severe. “Sales will plummet as a result of the tax, because people have a choice. If carbonated drinks are much more expensive, then people will just opt for water,” said one analyst. This is just the beginning. Like other GCC states, UAE is also set to introduce VAT for the first time in its history. A 5% tax will be implemented starting January 2018. Of course, some basic goods are VAT exempt, but UAE, especially Dubai and Abu Dhabi, is known as a haven for luxury goods. sources: Washington Post, GulfNews
graphics courtesy of Gulf News
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UAE's Tax announcement comes just two months since Saudi Arabia imposed SIN TAXES on similar items with similar price increases in June.

SAUDI SIN TAX: Price of Soft Drinks Increase, Cigarette Doubles


President of the UAE Sheikh Khalifa bin Zayed Al Nahyan approved the Federal Decree-Law on Excise Tax last Monday, imposing excise taxes to products that are deemed unhealthy. The plan to tax products that are detrimental to health has been in place for some time now. The government hopes people will cut down on sugary products following this tax.

 The UAE government also hopes the new excise taxes will help boost revenue and help offset the impact of lower oil prices. The gradual introduction of such taxes is part of a region-wide effort in the Gulf to diversify revenue streams away from oil.

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The tax is expected to generate up to around Dh7 billion in annual revenues for the Federal Budget. They also believe, the move will reduce health costs for thousands of residents in the Emirates due to medical costs of obesity.
The cost of living in the UAE is about to increase in a few weeks. Starting October 1, the price of some selected items will increase by as much as 100 percent, or double. The UAE’s tax authority announced that a 50 per cent tax would be imposed on carbonated drinks, while energy drinks and tobacco products would attract a 100 percent tax. Carbonated water is exempt from the carbonated drinks tax. The prices of excise goods at points of sale - groceries and stores - must include the Excise Tax. Duty Free purchases at airports will also be exempt from the tax, as long as passengers are leaving the UAE. Passengers who purchase duty free items as they arrive in the UAE will be taxed. UAE's Tax announcement comes just two months since Saudi Arabia imposed SIN TAXES on similar items with similar price increases in June. President of the UAE Sheikh Khalifa bin Zayed Al Nahyan approved the Federal Decree-Law on Excise Tax last Monday, imposing excise taxes to products that are deemed unhealthy. The plan to tax products that are detrimental to health has been in place for some time now. The government hopes people will cut down on sugary products following this tax. The UAE government also hopes the new excise taxes will help boost revenue and help offset the impact of lower oil prices. The gradual introduction of such taxes is part of a region-wide effort in the Gulf to diversify revenue streams away from oil. The tax is expected to generate up to around Dh7 billion in annual revenues for the Federal Budget. They also believe, the move will reduce health costs for thousands of residents in the Emirates due to medical costs of obesity. Additional products may be taxed in the future at rates of up to 200 per cent, but as of now it is just energy drinks, fizzy drinks, and tobacco. Experts say the new taxes on tobacco products and carbonated drinks will have an impact on the industry. They predict that the impact on the sale of fizzy and energy drinks would be swift and severe. “Sales will plummet as a result of the tax, because people have a choice. If carbonated drinks are much more expensive, then people will just opt for water,” said one analyst. This is just the beginning. Like other GCC states, UAE is also set to introduce VAT for the first time in its history. A 5% tax will be implemented starting January 2018. Of course, some basic goods are VAT exempt, but UAE, especially Dubai and Abu Dhabi, is known as a haven for luxury goods. sources: Washington Post, GulfNews
Obesity rates in the UAE is higher than world average

Additional products may be taxed in the future at rates of up to 200 per cent, but as of now it is just energy drinks, fizzy drinks, and tobacco.


Experts say the new taxes on tobacco products and carbonated drinks will have an impact on the industry. They predict that the impact on the sale of fizzy and energy drinks would be swift and severe. “Sales will plummet as a result of the tax, because people have a choice. If carbonated drinks are much more expensive, then people will just opt for water,” said one analyst.

 This is just the beginning. Like other GCC states, UAE is also set to introduce VAT for the first time in its history. A 5% tax will be implemented starting January 2018. Of course, some basic goods are VAT exempt, but UAE, especially Dubai and Abu Dhabi, is known as a haven for luxury goods.

 sources: Washington Post, GulfNews



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Thursday, August 10, 2017

Saudis Start to Feel Negative Impact of Expat Fees

Looking back a year ago into the plans of the Saudi Government to effectively earn huge sums of money by taxing expatriates in one form or another, everyone but the government saw the toll it would take, not only with expatriates but with the local economy as well. Fast forward to today, a number of expatriates have opted to send their families back home following the imposition of the dependents' annual fees than began July 1st. This has resulted in an unusually large number of apartments being vacated with no new tenants coming in. In what seems to be the beginning of a domino effect, real estate prices in the Eastern Province have crashed, causing a nervous slowdown in the construction industry and effectively bringing down with it the price of construction materials. According to real estate agencies, prices of land and houses have been on a continuous downward trend since the end of 2016. The market was hoping to see stability in prices at the beginning of this year. But the first quarter results showed an even more worsening figure. According to trade analysts and real estate agents, prime land rates in Al-Khobar and Dammam in the Eastern Province witnessed a sharp decline of around 18%. The rates were even lower in remote areas, going down by more than 20%. The fall in the prices began about six months ago when nervous expatriates accepted the fact that the government was hell-bent in imposing the expat fees as well as new taxes, and that they would have to face the brunt of it. Alongside the decline in real estate price, Saudi Arabia has also witnessed a sharp drop in house rents in the past 8 months. This is mostly due to the fact that a majority of renters are expats, mainly because they are not allowed to purchase real estate properties in the kingdom. According to one estimate, house rents in prime locations in Al- Khobar and Dammam have gone down by 15 to 20% in a country where just a few years ago, rents were expected to increase annually. Real estate agents fear further slide in rental rates as there are more vacant houses and less takers - this after the government, in a bid to stabilize the then increasing rental rates, pressured landowners to develop unused lots or risk a government buyout. "A four-room apartment which was rented for SR24,000 a year is now offered at SR22,000 or less," one real estate agent is quoted as saying. Similarly flats in Dammam Housing (Iskan), which were fetching rent as high as SR35,000 a year until last year, are now lying vacant with a rent tag of SR25,000 per annum. Agents say the rent prices are expected to come further down as many more expatriates will send their families and dependents to their respective homes. The major reason real estate brokers cited was nervousness in the market over large-scale exodus of expatriates from the Kingdom. No doubt that new fee on expatriates, increase in visa fee and other expat-related hikes will initially bring in huge revenue and will also help in Saudization campaign, but economists warn that the flight of expatriate workers is disturbing the projected population ratio, thus affecting demand. The impact will not be restricted to real estate but will spread to consumer items, services and even industrial products. The declining land prices and house rents have already impacted the construction industry adversely. Construction companies are getting less and less contracts, forcing them to lay-off a huge number of employees. Some companies have totally closed shop. Since construction on several projects has either slowed down or completely stopped, the construction-related material industry has also suffered a major setback. The worst affected is the cement industry which has witnessed lowest price decline since 2008. According to market retail rate a cement bag that was costing SR240 is now costing between SR130-170. The high quality Sulfur Resistant Cement, which was being sold in retail market for SR260, has gone down to SR150-190. The larger cement companies including Yamama Cement, Eastern Cement, Qassim Cement have experienced a decline in profit from 46 percent to 81 percent in the first six months of 2017. Industry expert say that these declines will eventually impact other industries as well and unless some drastic corrective measures are taken, the situation is likely to worsen further.




Looking back a year ago into the plans of the Saudi Government to effectively earn huge sums of money by taxing expatriates in one form or another, everyone but the government saw the toll it would take, not only with expatriates but with the local economy as well.

Fast forward to today, a number of expatriates have opted to send their families back home following the imposition of the dependents' annual fees than began July 1st. This has resulted in an unusually large number of apartments being vacated with no new tenants coming in.
Plenty of new apartments, lesser and lesser renters

In what seems to be the beginning of a domino effect, real estate prices in the Eastern Province have crashed, causing a nervous slowdown in the construction industry and effectively bringing down with it the price of construction materials.

According to real estate agencies, prices of land and houses have been on a continuous downward trend since the end of 2016. The market was hoping to see stability in prices at the beginning of this year. But the first quarter results showed an even more worsening figure.
For Rent signs are seen everywhere as more and more expats leave the kingdom.

According to trade analysts and real estate agents, prime land rates in Al-Khobar and Dammam in the Eastern Province witnessed a sharp decline of around 18%. The rates were even lower in remote areas, going down by more than 20%.

The fall in the prices began about six months ago when nervous expatriates accepted the fact that the government was hell-bent in imposing the expat fees as well as new taxes, and that they would have to face the brunt of it.


Alongside the decline in real estate price, Saudi Arabia has also witnessed a sharp drop in house rents in the past 8 months. This is mostly due to the fact that a majority of renters are expats, mainly because they are not allowed to purchase real estate properties in the kingdom.

 According to one estimate, house rents in prime locations in Al- Khobar and Dammam have gone down by 15 to 20% in a country where just a few years ago, rents were expected to increase annually. Real estate agents fear further slide in rental rates as there are more vacant houses and less takers - this after the government, in a bid to stabilize the then increasing rental rates, pressured landowners to develop unused lots or risk a government buyout.
Commercial spaces are also affected as more and more expats leave homes and businesses due to policies seen as unfavourable, even aggressive, against expats.

"A four-room apartment which was rented for SR24,000 a year is now offered at SR22,000 or less," one real estate agent is quoted as saying. Similarly flats in Dammam Housing (Iskan), which were fetching rent as high as SR35,000 a year until last year, are now lying vacant with a rent tag of SR25,000 per annum.

Agents say the rent prices are expected to come further down as many more expatriates will send their families and dependents to their respective homes. The major reason real estate brokers cited was nervousness in the market over large-scale exodus of expatriates from the Kingdom.

No doubt that new fee on expatriates, increase in visa fee and other expat-related hikes will initially bring in huge revenue and will also help in Saudization campaign, but economists warn that the flight of expatriate workers is disturbing the projected population ratio, thus affecting demand. The impact will not be restricted to real estate but will spread to consumer items, services and even industrial products.


The declining land prices and house rents have already impacted the construction industry adversely. Construction companies are getting less and less contracts, forcing them to lay-off a huge number of employees. Some companies have totally closed shop. Since construction on several projects has either slowed down or completely stopped, the construction-related material industry has also suffered a major setback. 
The worst affected is the cement industry which has witnessed lowest price decline since 2008. According to market retail rate a metric ton of cement that was costing SR240 is now costing between SR130-170. The high quality Sulfur Resistant Cement, which was being sold in retail market for SR260 per metric ton, has gone down to SR150-190.
The larger cement companies including Yamama Cement, Eastern Cement, Qassim Cement have experienced a decline in profit from 46 percent to 81 percent in the first six months of 2017.

Industry expert say that these declines will eventually impact other industries as well and unless some drastic corrective measures are taken, the situation is likely to worsen further.

 sources: Saudi Gazette



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