Saudi denies social media ‘rumours’ about expat fees

Saudi’s ministry of Labour and Social Development has “categorically denied social media rumours” about plans to keep the expat fees for companies fixed at the initial level, according to local media reports.

In January, Saudi introduced a monthly fee of SAR400 ($107) on companies for each foreign worker they hire. Firms that employ an equal or greater number of Saudis than expats pay SAR300 ($80).

The monthly fee will increase to SAR500-600 ($133-160) per worker in 2019 and then SAR700-800 ($187-$213) per worker in 2020.

The Council of Saudi Chambers has repeatedly called for changes to the levy, including exempting small and medium enterprises, making payment monthly rather than at visa renewal or issuance and extending the timeline for increases from 2020 to 2025.

However, during a meeting with the National Committee for Contractors in the Council of Saudi Chambers, Saudi’s Minister of Labour and Social Development clarified that the fee system will remain in place, Saudi Gazette reported.

The construction sector in the kingdom has been the hardest hit by the new fee, with thousands of expat workers leaving the country early this year.

A report by Jadwa Investment found that between Q4 2017 and Q1 2018, about 221,000 foreign workers left the labour market, with the construction sector seeing the biggest exodus at about 126,000 expatriates.

“The first wave of foreigners leaving the market have been unskilled, low-wage labour, who have been made redundant by their employer due to rising labor costs through the first round of expat levies,” said the report.

Despite growing pressure on the private sector, the kingdom has said that it aims to pursue the new policy to increase Saudisation.

In March, Saudi’s finance minister asserted that the government doesn’t plan to revise the “expat fee” in light of complaints from the private sector.

Read more: Saudi finance minister says no plans to revise expat fee, other reforms

The government is expecting to raise $6.3bn from the new foreign worker fee in 2018 $11.73bn in 2019 and $17.33bn in 2020, Okaz reported in December.

Read: Saudi government to raise $6.3bn from 2018 expat levy