JEDDAH: DIANA AL-JASSEM | ARAB NEWS STAFF
Published — Wednesday 10 July 2013
Last update 17 July 2013 10:13 am
Saudi nationals with US citizenship are set to pay a 30 percent tax on bank deposits over $ 50,000 (SR 187,498) starting in 2014, it has been confirmed here.
The US government requires all its citizens working abroad to pay taxes on their savings, including those holding dual citizenship.
This tax was introduced in 2011.
Many Saudi nationals have dual citizenship to facilitate travel and business.
Saudis with US citizenship also tend to get paid more in the Kingdom.
Talat Hafiz, secretary-general of the Media and Banking Awareness Committee of Saudi Banks, confirmed that local banks would start disclosing the bank deposits of all US citizens by 2014 to the US government.
Hafiz said the new system is to prevent tax evasion by US citizens working abroad.
Fadhul Albuainain, an economist and banker, said the new move would come as a shock to Saudis not accustomed to paying any taxes in the Kingdom.
He expects a 30 percent tax on total savings of $ 50,000 or SR 187,498.
Many Saudis earning low salaries will not be affected by the tax regime, he said.
He added: “I think many Saudis will prefer to waive their American citizenship to avoid the new tax system.”
Albuainain said many Saudis have inheritance money in banks that they generally do not touch.
With the new system, this money will be taxed by the US taxman.
Saad Al-Zahrani, a Saudi engineer with American citizenship, says he will not be affected because he earns $ 5,000 a month and does not have savings of $ 50,000.
“I wonder why people are worried about this new system. Most Saudis earn about $ 3,000 which is SR 11,249 a month,” he said.
He said those with huge savings would be affected.
If given the choice, he would give up his US citizenship and "choose the money."