You may have recently heard about Saudi Arabia’s expat tax that was introduced at the start of July. The tax is expected to gradually rise from SAR 100 (USD $26.50) each month per family member to SAR 400 (USD $106.60) per month by 2020 and this is making the number of expats leaving Saudi Arabia increase rapidly.
Saudi Arabia’s popularity
Many expats choose to live in Saudi Arabia due to the job opportunities that are available and the relatively low cost of living. Also, living in the Middle East offers a completely different culture for many expats and this can be extremely appealing for those who wish to embrace something totally new. New food, new people and new traditions allow you to have plenty of stories to tell your loved ones back home.
How many are leaving?
A report prepared by Banque Saudi Fransi suggested that 165,000 expats are expected to leave every year due to this new expat tax. Many expatriates will not be able to keep up with the new levies that are being imposed, forcing them to leave the country. This means that by 2020 670,000 expats will likely have gone elsewhere.
The effect on Saudi Arabia
This could have a disastrous effect on Saudi Arabia because there are currently 11.7 million foreigners living in the country who therefore make up a considerable part of the population. With the prospect of many expats leaving, the market is likely to suffer because they represent a substantial amount of spending power. If they leave, this will therefore increase the prices of commodities and services.
Low income jobs such as drivers and household servants will become difficult to fill and this could have a significant effect on those who desperately need them, people such as the elderly.
Although the government hope to give the jobs that become available to Saudi people and ultimately solve the unemployment problem, many jobs filled by expats are in the technical, technological and vocational sectors. These sectors are extremely niche and require a significant amount of training that Saudi’s do not have access to. This could, in the worst case scenario, make some of these companies close their doors.
Expats leaving Saudi Arabia will evidently have a large impact on the country. Many citizens are calling on the government to rethink the expatriate tax in order to protect the economy and ensure that the support expats provide to the country continues. If this tax is not revoked, by 2020, Saudi Arabia will likely feel the effects of the mass migration.