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The government has outlined a plan to increase the state’s non-oil revenues by raising fees on foreign workers and their dependents, including on remittances.
The government has outlined a plan to increase the state’s non-oil revenues by raising fees on foreign workers and their dependents, including on remittances.

S. Arabia Eyes $53b Plan to Boost Flagging Growth

Companies now pay 200 riyals a month to employ each foreign worker above the number of Saudi workers they employ; from 2018, the fee will rise to 400 riyals per month, and it will increase further to 600 riyals in 2019 and 800 riyals in 2020

S. Arabia Eyes $53b Plan to Boost Flagging Growth

Saudi Arabia’s government plans to provide 200 billion riyals ($53 billion) of incentives to the private sector over the next four years in its drive to diversify the economy beyond oil, according to an official planning document.
A reform program launched this year, after a plunge in oil prices slashed state revenues in the world’s top oil exporting country, envisions the private sector investing tens of billions of dollars over the next several years on projects from industrial zones and power stations to housing, schools and communications, Reuters reported.
But the willingness and ability of private sector companies to invest in projects in an economy which has traditionally relied on infusions of petrodollars by the government has been a major uncertainty in the program.
“An incentives package is proposed and set at 200 billion riyals between 2017 and 2020 to help boost economic growth,” said a document released by the government late on Thursday along with its 2017 budget plan.
An investment fund will be established to provide capital that will facilitate investments, the document said without giving details of the fund’s operations or the nature of the incentives. It said the incentives would be directed towards sectors that supported economic growth and created jobs for Saudi citizens.
Budget Deficit
Riyadh slashed spending on infrastructure and perks for civil servants to get its finances under control. For the first time in years, it kept its spending below its original budget projection in 2016; actual spending was 825 billion riyals compared with a projection of 840 billion.
Saudi Arabia said it had succeeded in cutting a huge state budget deficit caused by low oil prices and would increase government spending in 2017 to support flagging economic growth.
Meanwhile, analysts said Saudi Arabia's outlook remained uncertain. Some parts of the 2017 budget plan—including a big jump in oil income projected next year—were not fully explained, and the economy is likely to face more pain in coming years as Riyadh struggles to eliminate the deficit entirely.
The deficit shrank to 297 billion riyals ($79 billion) in 2016 from last year's record gap of 367 billion, which was a mammoth 15% of gross domestic product. The original 2016 budget plan had projected a deficit of 326 billion riyals.
Revenues were slightly higher than expected at 528 billion riyals instead of 514 billion as the government raised cash with steps such as higher municipal and visa fees.
Economic growth slowed to 1.4% in 2016, far below the average of 4% in the past decade, the government said.
New Expat Levy
The government has outlined a plan to increase the state’s non-oil revenues by raising fees on foreign workers and their dependents. About 10 million foreigners live in the kingdom, in addition to roughly 20 million local citizens.
Companies now pay 200 riyals a month to employ each foreign worker above the number of Saudi workers they employ; from 2018, the fee will rise to 400 riyals per month, and it will increase further to 600 riyals in 2019 and 800 riyals in 2020.
Fee for the dependents of expat workers are also slated to take effect by July 2017 so as not to shock families who currently have children enrolled in schools around the region. The fee for dependents is SR300.
While the higher fees will boost the government’s revenues, they will also increase costs for companies, which could hurt their ability to invest.
The Shoura Council is discussing plans to impose a 2 to 6% tax on expat workers’ remittances.
There are 11,660,998 expatriates and their dependents in the kingdom, according to data. The number of expat dependents under 19 years of age in 2016 was 2,228,525. The monthly fees that will be collected for these dependents will be around SR222,852,500 per month.

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