Saudi Arabia is eyeing the huge amount of remittances sent by expats in the kingdom every year.
The Saudi Arabia Shura council sat down on Tuesday to discuss a proposal to impose a tax on the remittance money sent by non-residents out of the country.
According to the proposal, a 6% tax will implemented initially on all remittance sent by the expats for the first year. If the non-resident has been staying for 5 years or more in the country, the tax on remittance will be reduced to 2%.
This applies to Pakistani expats staying in Saudi Arabia as well, and has the potential to cut the amount of remittances sent through official channels by Pakistanis to their family at home significantly.
Pakistanis, on average, send over or around $450 million back to Pakistan from Saudi Arabia. A six percent tax will mean that as much as $26 million or Rs. 26 billion of international inflows to Pakistan per month will be hampered due to this new tax.
Second Highest Remittances in The World
Currently Saudi Arabia happens to be the second highest in remittance sending countries in the world. Former Shura council member Husam Al Angari who submitted the proposal was quoted saying that remittances have tripled since 2004. They stood at $15.1 billion in 2004 which increased to over $36 billion by 2013.
The World Bank on the other hand claims that Saudi Arabia sent remittances of around $37 billion in 2015. Both Al Angari and World Bank’s statements are similar about Saudi Arabia being the second highest remitting country in the world though. The first place goes to US.
This move might be to decrease the reliance on revenues earned through oil by Saudi Arabia and shift to other means of finance.
Apart from Saudi Arabia, tt seems UAE has also been considering on imposing a tax on remittances as well.
For now no formal decision in this regard has been made yet from UAE government.
Via Arabian Business