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.”


FaceOf: Kamel Al-Munajjed, chairman of the Saudi-Indian Business Council

Updated 2 min 19 sec ago
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FaceOf: Kamel Al-Munajjed, chairman of the Saudi-Indian Business Council

  • After working for several years as a systems engineer, Al-Munajjed became head of investment and private banking at Saudi Fransi Bank, from 1988 to 1993
  • He earned his bachelor’s degree from the American University of Beirut, and his MBA from the Abu Dhabi campus of the international business school INSEAD

Kamel Al-Munajjed is the chairman of the Saudi-Indian Business Council. 

He earned his bachelor’s degree from the American University of Beirut, and his MBA from the Abu Dhabi campus of the international business school INSEAD. As well as working for the Saudi-Indian Business Council, he is also a managing partner at Urjuan Real Estate Development and Investment Co. 

After working for several years as a systems engineer, Al-Munajjed became head of investment and private banking at Saudi Fransi Bank, from 1988 to 1993. 

For the next 11 years, he served as vice president of Al-Munajem Group, and in 2006 he became chairman of the Saudi-French Business Council. He became chairman of SHUAA Capital in 2012, leaving the financial services provider in 2015.

On Thursday, the Saudi-Indian Business Council held a joint meeting chaired by the head of the Council of Saudi Chambers, Dr. Sami Al-Obaidi.

The forum discussed many ongoing areas of business between the Kingdom’s various chambers of commerce, as well as ways of coordinating trips by representatives between India and Saudi Arabia for investment in the oil and gas industries. Tourism, mineral extraction, health care, information technology and other infrastructure projects were also discussed.

In a statement, Al-Munajjed praised the bilateral relations between Riyadh and New Delhi, adding that the visit of Crown Prince Mohammed bin Salman to India this week was a positive indicator for Saudi companies looking to invest in the subcontinent.