The Shoura Council, a highly influential consultative group made up of some of the leading Saudi Arabian nationals, has rejected a proposed 10% income tax on foreign individuals. While, Saudi Arabia levies corporate taxes, it has traditionally not levied an individual income tax on expatriate workers. However, the country was considering levying a tax on expatriates as a means of reducing public debt and reducing the number of foreign workers in the hope that unemployed Saudi Arabian nationals would replace them.
The Shoura Council's rejection of the proposed tax has been hailed as another sign of Saudi Arabia's interest in increasing foreign investment in Saudi Arabia. Foreign companies in Saudi Arabia have advised that it will be difficult to recruit well-trained expatriate professionals unless they are offered a tax-free salary. Also, this move is being applauded as another sign that Saudi Arabia is serious about joining the World Trade Organization and wishes to avoid taking actions that may impede its application to join the WTO.
© 2021 Euromoney Institutional Investor PLC. For help please see our FAQs.