Shura Council criticises Saudi Arabia's "expat tax"
It comes as no surprise that the general consensus among many businesses in Saudi Arabia about the new rule that effectively punishes organisations for hiring more expat workers than local professionals is one of disbelief.
Last month it was revealed that the country’s labour ministry was putting in place a new directive that requires businesses to do more to support local talent by putting in place a strict quota in terms of how much of their workforce is made up of expats.
In response to this, the Consultative Assembly of Saudi Arabia, which is also known as the Shura Council, has slammed the labour ministry for enacting the new tax. Companies that fail to ensure a suitable ratio are liable to pay 2,400 riyals (approximately £400) a year for every superfluous foreign employee.
Members of the council have also challenged the legality of the move, stating that the ministry of labour is not a legislative body and lacks the authority to put into effect such a provision.
Major-general Abdullah Al-Sadoun, a prominent member of the council, told the Saudi Gazette that any decision such as this needs to be sent to the council for review, whereupon a specialist committee will make recommendations.
His colleague, Khalifa Al-Dowsary, added: “The ministry must give reasons and justification to these businessmen. It should first explain the reasons behind such fees and refrain from taking such spontaneous decisions.”
Though the Shura Council itself does not possess any direct powers, it does carry a lot of sway in constitutional matters and is made up of very powerful individuals.
Anoush Ehteshami, professor of international relations at Durham University, told the Telegraph that as King Abdullah has appointed these people to advise him, any suggestions they make will carry considerable weight.
According to Saudi Arabia’s labour ministry, the decision to restrict the number of foreign professionals is a much needed initiative that will help the country become less dependent on international workers.
Additionally, this is also considered an effective way to help tackle unemployment in the oil rich country, which currently stands at ten per cent.
This should be possible as there is plenty of scope for development in the country and, given that it possess one-fifth of the world’s petroleum reserves, has the financial clout to invest in infrastructure.