The financial health of Saudi Arabia’s economy is reportedly robust, according to statements made by the country’s Finance Minister Mohammed Al-Jadaan. The minister indicated that the government is considering re-evaluating the levy imposed on expatriates’ dependents, aiming to enhance the nation’s attractiveness to skilled professionals.
During a podcast discussion, concerns were addressed regarding the impact of the dependent fee on domestic spending. A notable outcome was that a considerable number of expatriates opted to relocate their families to their home countries, leading to the loss of a substantial consumer segment and the outward flow of remittances.
Introduced in 2017, the dependent fee began at SR100 and has since been raised to SR400 ($100.6) per dependent. Al-Jadaan explained that the fee was implemented to offset the cost of subsidized services utilized by dependents, such as electricity, water, and healthcare. With over two million dependents benefitting from such services, an economic analysis had deemed the fee necessary, particularly as these individuals mostly spend on imported goods, contributing to capital flight.
However, the situation has evolved. Reductions in subsidies and the implementation of the Citizen’s Account Program, which provides targeted support, have prompted a reevaluation of the policy. The minister acknowledged that if the economic benefits of the expatriate community outweigh the costs, the dependent fee policy may be revisited, especially considering the current goal to attract and retain talented individuals and their families.
Al-Jadaan also highlighted that a significant portion of Saudi consumption is imported, which necessitates a continuous assessment of the policy’s relevance. He reiterated the government’s commitment to adjust the dependent fee in line with strategic objectives to enhance Saudi Arabia’s appeal to highly skilled expatriates.
Regarding the Value Added Tax (VAT), Al-Jadaan pointed out its role in providing support to low-income families through the Citizen’s Account Program. Even with the VAT increase to 15 percent and rising energy prices, the program has been adjusted to soften the impact on citizens. The minister clarified that there are no current plans to decrease the VAT rate, as fiscal policies are tailored to economic conditions and aim to balance social needs.
In discussing the broader economic picture, Al-Jadaan mentioned significant progress in diversifying revenue streams, with non-oil revenues increasing from SR79 billion to an estimated SR440 billion. This growth across various sectors is indicative of a new chapter in Saudi Arabia’s economic diversification, further solidifying its economic stability and expansion.