No VAT on expat remittances in Saudi Arabia, say bankers

Updated 18 December 2017
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No VAT on expat remittances in Saudi Arabia, say bankers

RIYADH: Senior bankers clarified on Sunday that money sent home by expatriate workers will not be taxed under the value-added tax (VAT) reform initiative to be launched by the Saudi government on Jan. 1 next year.
It was also announced that companies and businesses have only three days left to register and obtain their dedicated VAT account numbers.
Saudi Arabia’s General Authority for Zakat and Income Tax (GAZT) has urged businesses with annual revenues of more than SR1 million ($266,640) to register for VAT before the deadline of Dec. 20, 2017.
“The deadlines for companies with annual revenues between SR1 million and SR375,000, however, has been extended by a year until Dec. 20, 2018,” according to a GAZT statement.
“All businesses including commercial organizations and banks have been advised to make sure they understand the VAT rules and be ready for their implementation after 15 days from now,” said Syed Ahmed Ziauddin, a senior banker who heads the financial institutions and public sector group at Bank Al-Jazirah in Riyadh.
He said: “Aljazirah Bank is fully ready to start from Jan. 1 ... and we are going to apply VAT on our service charges.”
He said that all commercial banks have geared themselves to comply with the VAT regulations. “The banks have also educated their customers about VAT besides advising them about various services that will come under the purview of VAT,” said Ziauddin, while adding that the remittances will not be taxed under the VAT system.
“Money remittance outflows will be exempted,” said Abdullah Ali Nasser Alfuraiji, chief of the Tahweel Al-Rajhi in Riyadh. Alfuraiji made it clear that “the 5 percent VAT tax would be levied on the remittance service fees, rather than the remittances themselves.
He emphasized that “Tahweel will be charging 5 percent of SR18, which we charge as remittance fee for sending funds to India. Hence, the rise will be nominal with customers required to pay 9 halalas extra for remitting money to India.”
The Tahweel chief added that this will be negligible, but will differ from country to country.
Referring to the implementation of the VAT and the levies imposed on remittances, Ahmed Mohammed Al Enazi, general manager of Enjaz Banking Services, the remittance arm of Bank Albilad, said: “There will not be any impact on remittances.” He also confirmed that “5 percent VAT will be imposed on service charges... say like 5 percent of SR16 in case of India and 5 percent of SR20 in case of Pakistan.”
“The 5 percent on banks’ service fees will be paid by the person sending money as per guidelines of the General Authority of Zakat and Tax (GAZT),” said Ahmed.
Banks and remittance centers in the Kingdom charge varying fees on remittances sent to different Asian and European countries.
The imposition of 5 percent VAT “on service charges, not on remittance amounts” was also confirmed by Anwar Ahmed Wajid Khajja, manager of products and partners at Fawri, the remittance wing of Bank Aljazirah in Riyadh.
Referring to the benefits of VAT especially those collected by banks and remittance centers, Cenon Nonie C. Sagadal Jr., marketing representative of Rizal Commercial Banking Corporation (RCBC) of the Philippines, said: “VAT is a welcome move with a slight increase in remittance fees, which will eventually benefit the remitters and the institutions.
“With the government meeting its financial goals as a result of VAT collection, more employment opportunities will be created not only for Saudis but also for expatriates within the framework of the Saudi Vision 2030.”


Saudi Crown prince’s India visit will help expand ties beyond energy

Crown Prince Mohammed bin Salman’s visit to India will boost robust interactions that New Delhi has established with Saudi Arabia over the last few years. (Supplied)
Updated 20 February 2019
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Saudi Crown prince’s India visit will help expand ties beyond energy

  • New Delhi’s participation in Kingdom’s mega projects a major aspect of renewed ties: Talmiz Ahmad

NEW DELHI: Saudi Crown Prince Mohammed bin Salman’s first visit to India is a landmark development in bilateral ties between India and Saudi Arabia, according to Talmiz Ahmad, a former ambassador to Riyadh.

Saudi Arabia is India’s largest supplier of crude oil, but since taking office in 2014 Prime Minister Narendra Modi has sought to use India’s growing economy to attract more investment from Saudi Arabia beyond energy, and foster cooperation on trade, infrastructure and defense.

Ahmad, author of several books on the Arab world and twice India’s Ambassador to Riyadh, said that while the backbone of New Delhi’s relationship with the Kingdom is energy, the two sides had been discussing “how to give greater substance and longevity to the relationship on the basis of concrete projects.”

Reuters reported this week that India is expecting Prince Salman to announce an initial investment in its National Investment and Infrastructure Fund, a quasi-sovereign wealth fund, to help accelerate the building of ports and highways. Saudi Arabia has also suggested investing in India’s farming industry, with an eye on food imports to the Kingdom. 

Ahmad said Saudi Arabia’s NEOM project, a $500 billion smart city in Tabuk province on the Egyptian and Jordanian borders, would also provide great opportunities for Indian companies. 

He added that Saudi Arabia’s Vision 2030, the crown prince’s blueprint to fundamentally transform Kingdom’s economy, presents another opportunity for Indian businesses to prosper from the relationship.

“India is extremely well placed,” said Ahmad. “We are world leaders in small and medium enterprises and in the services sector. Saudi Arabia also has proposals to develop its tourism and leisure sectors, and I believe India is also well placed in those areas too.”

He also discussed how the strategic partnership had been initiated by former Indian Prime Minister Manmohan Singh, who visited Riyadh in 2010, but that Modi, who visited in 2016, had added “considerable substance” to the relationship.

He stressed, though, that Riyadh’s ties with India are independent of its relationship with Pakistan. He added India and Saudi Arabia were also working together to improve the security situation in Afghanistan, to resolve the 17-year conflict between government forces and the Afghan Taliban, as well as in the wider West Asia region. 

“India has excellent relations with all the countries in West Asia, and New Delhi is well placed to address some of the concerns that all the countries have with each other,” he said.