Centrum Stosunków Międzynarodowych - 8 June 2016: Saudi Arabia considers income tax for foreign residents

Saudi Arabia plans to implement an income tax on foreign residents. Ibrahim al-Assaf, the finance minister of Saudi Arabia commented that “the cash-strapped kingdom seeks to raise non-oil revenues and cut spending to fund its $72bn plan to diversify the economy”. Riyadh (the capital of Saudi Arabia), seek for funds needed for wide-ranging reforms starting from fiscal and investment policy to education and housing initiatives. Saudi Arabia “is taking actions of tapping global bond markets and reprioritizing domestic spending”. Nowadays 1/3 of the residents are non-Saudis, implementing such taxes would bring a significant growth in Kingdom`s budget.

At the same time, it`s also raising a number of difficulties, such as hiring foreigners will be more difficult. Of course, it doesn`t mean instantaneous foreigners outflow, because of deterioration of the tax environment, but it will have a significant impact on expatriates live in the Kingdom. The Gulf’s income tax-free status is a key element in attracting foreigners to the region. Such policy could play against its creators.