Expats' Dependents Levy Starts 01 July 2017

Saudi Arabia imposes dependents levy on foreign workers in the private sector starting 01 July 2017. Expatriates working in private companies are obliged to pay SAR 1,200.00 every year to each dependent ( wife/husband and children)  under his/her sponsorship. The resident card or Iqama cannot be renewed unless this levy is paid. Also, exit/reentry visa cannot also be issued unless this dependent fee is paid.

(Image from http://blog.ubabenefits.com/bid/340565/Your-Dependents-Could-be-Costing-You)

Although the Iqama is renewed or exit/reentry visa was already issued prior to 01 July 2017, expats with dependents are still obliged to pay this levy. Foreign workers with wife/husband and children working in government and public sector are exempted to pay this levy.

Some private companies bear the cost of this new tax on expatriates to prevent their highly qualified employees for the first year. Whether they can still pay this levy in the next year is still unclear.

This levy on dependents of foreign workers will increase by SAR 100 each year until 2020 where it costs SAR 4,800 and thereafter.

Unless the private companies will continue to shoulder this dependent's fee or increase their salary by the same amount each year, foreign workers will start leaving in the next year. This levy, the Value Added Tax (VAT) and expats levy starting on 01 January 2018 will become a heavy burden to small and medium scale companies of Saudi Arabia. This might be the reason of their closing down in the future.