Fines for Saudi Firms that Employ Too Many Expats

Expat Globe

Saudi Arabia has long been a choice destination for expats primarily because they do not pay tax on their incomes. New rules set to come into force in the Kingdom mean that firms face fines if they employ more expats than locals.

Unemployment in the Kingdom of Saudi Arabia has recently climbed above 10% prompting the move. Companies will have to pay 2400 riyals which is approximately £400 for each expat they employ over and above the number of locals in employment with the firm.

This will provide a clear disincentive for Saudi firms to employ expats making the Saudi expatriate lifestyle rather more insecure.

With expats making up 9 out of every 10 people employed in Saudi Arabia it is not clear what impact the new rules will have on the local economy. People from Gulf Co-operation Council (GCC) countries or born to Saudi mother will be exempt.

Expats in the Middle East will be looking with interest to see if other countries in the region bring in similar policies.

A spokesman for the Saudi labour ministry said: "The aim of this decision is to increase the competitive advantage of local workers by reducing the gap between the cost of expatriate labour and local labour."