Negative Impact of Dependent Tax on Saudi Arabia’s Economy

As you may all know that the Saudi government last year introduced fees for expat family visit visas and Umrah in order to increase the revenue of the state. Instead of increasing the revenue, the hike in visa fee indeed negatively affected the market. The number of visits by family members of expat workers dropped drastically. Instead of bringing family members to the Country, the workers traveled to their home countries for their vacations, resulting in the hike of money spent on flights outside the Kingdom.

Similarly, the dependant fee had made the expat workers purchase lesser goods and services to be able to save money for dependant tax and returning their families to their home countries resulting in drop of market and sales of products.

The key impacts of dependant fees are discussed below:

House Rents:

The houses acquired by the expat families are left vacant as many expat families have started returning to their home countries and the expats are living with bachelors sharing the rents. This may affect the state’s economy to a larger extend.

Purchase of Goods and Services may be drastically dropped:

The imposition of tax will approximately make 1 million expat families to return to their home countries, resulting the expat workers sending 80% of their income back to their home countries. This could severely effect the Saudis economy in coming years.

We hope that the Saudi Government would make a deeper study on the dependent tax and its impact in the near future to the country.

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