Following the Saudi Arabian budget announcement for the coming year, it has been revealed that new legislation is being brought into force in Saudi Arabia (KSA), which will impose new monthly fees on: (i) expats who are sponsoring dependants in KSA; and (ii) private sector companies employing expats.
Timeframe for introduction
Further to our alert alert of 26 January 2017, the implementation of the new fees sponsoring dependants in KSA is due to commence on 1 July 2017. It is understood that the fees will be collected at the time of the Muqeem renewal. For expatriate employees employed in the private sector, the implementation of the new fees will commence on 1 January 2018.
The fees will be introduced on a phased basis over the course of 3 years, with the final phase of implementation expected to be in July 2020.
What will change?
Expats sponsoring dependants
Currently, besides the relevant application fees, expats in KSA are not required to pay a fee in respect of any dependants living with them. From July, the monthly fee will be imposed on expats for each dependant sponsored by them in KSA.
The new fee will apply to expatriates working in commercial entities only, and will not be applied to domestic workers.
Companies hiring expats
Under the new rules, fees will be payable by companies employing expats, regardless of the proportion of expat employees in relation to Saudi employees.
The fees will apply as follows:
|More expat employees (starting month)||More Saudi employees or equal numbers (starting month)||Expat dependants (starting month)|
SAR 100 / month (July)
SAR 400 / month (January)
|SAR 300 / month (January)||SAR 200 / month (July)|
SAR 600 / month (January)
|SAR 500 / month (January)||SAR 300 / month (July)|
SAR 800 / month (January)
|SAR 700 / month (January)||SAR 400 / month (July)|
Points to note for employers
In the meantime, employers in KSA should be aware of the coming changes and ensure that they make provision for the same in their budgets and their recruitment planning.
These new fees are a further incentive and reminder for employers to take steps to bring their recruitment practices in line with Saudisation requirements, if they are not doing so already.
We are continuing to monitor developments in this area and will update on any announcements that are made.