Economy - - Dec 28,2016
The falling crude oil prices in the international market has stimulated Saudi Arabia for another budget overhaul, as the government plans to levy tax on expats living in the country and increase gas prices.
Saudi Arabia has already curbed its spending and the current situation poses a threat of four more years of austerity in the kingdom. The kingdom’s budget deficit rose up to 366 billion riyals ($98 billion) in 2015 and over 297 billion riyals this year. For the first time ever, the government was forced to borrow $17.5 billion in October from international investors. The government has already slashed energy subsidies and trimmed down wages for officials.
In the latest official report – the Fiscal Balance Program 2020, the government released strict plans to regain control over the economy.
Situations will be tougher for Expats living in Saudi Arabia as the new budget will bring new and unexpected changes, including an additional burden of tax.
Foreigners working in the country will have to pay 800 riyals as tax to the government. Not just that, the workers who have called their families in the country will be liable to pay an additional tax of 300 riyals per family member. As per the latest stats from the Saudi Department of Statistics and Information, there are over 10.5 million expats living in Saudi Arabia.
The Saudi government marginally slashed subsidies on gas and related energy supplies, which saved them about 28 billion riyals this year. The government is now planning to save around 209 billion riyals per year by 2020 by gradually phasing out all subsidies on gas, electricity and water supplies.
From the second quarter of 2017, the government will also levy taxes on harmful products like tobacco and sugary drinks. It has also announced to introduce a general sales tax as part of a comprehensive initiative between the 6 Gulf Cooperation Council states. Saudi Arabia expects to raise its non-oil revenue by 152 billion riyals by 2020.