SR 2,400 expat fee: Contractors see some relief

The government has decided to offset the cost of expat taxes imposed on contracting companies by asking these firms to incorporate the additional cost in their agreements for future projects, said Abdullah Radwan, chairman of the contractors committee at the Jeddah Chamber of Commerce and Industry (JCCI).
Many contractors have been complaining against shrinking profit margins following a recent move by the Labor Ministry to impose a tax of SR 2,400 on each expat worker.
They also pointed out that contracts, which had already been signed at fair estimates, did not include the tax imposed on expat workers, which runs into billions of Saudi riyals.
Radwan also said: “The ministry has asked us to direct contractors to add the value of new taxes in new contracts before they are signed with the government. Besides, the government will also look into the issue of the tax burden on projects for which agreements had already been signed.”
Httab El-Enizi, spokesperson for the ministry, confirmed that Minister Adel Fakeih had promised to look into contractors’ complaints.
Radwan said a large number of contractors had already filed their complaints, but their numbers were not known due to the sheer volume of such complaints.
“We are still processing the applications for relief, and this could run into millions of Riyals,” Radwan.
“The government’s decision is a welcome move, but many companies are still confused when it comes to determining the contract date and the commencement of payments,” he said.
“Businessmen and contractors will incorporate the costs of expat fees in future contracts, but for contracts that have already been signed, there is a process to calculate the burden and submit it to the government,” he said.
Abdulaziz M. Al-Angari, board member and vice president of Al-Angari Holding Company, told Arab News that the SR 2,400 tax would only add to the financial losses of contracting companies.