Labor Ministry promises to address problems caused by new tax

JEDDAH: The Ministry of Labor will address private business concerns over the fees charged to companies for expatriate workers if their numbers exceed those of Saudi employees.
Labor Minister Adel Fakeih yesterday said his ministry will address the problems faced by businesses as a result of the ministry imposing an annual fee of SR 2,400 for every expatriate in excess of Saudi workers in the private sector.
The minister said his ministry would look at legitimate and reasonable concerns fairly.
The minister made his remarks after talks with Abdullah Al-Mubti, president of the Council of Saudi Chambers, and Abdul Rahman Al-Zamil, chairman of the Riyadh Chamber of Commerce and Industry.
Discussions focused on observations brought forward by business leaders in the community. Some company owners have said the new fee would have a negative impact on their business.
The Council of Saudi Chambers agreed to address the issue at a meeting of its various committees to discuss how the fee would impact business. The committees will be asked to propose solutions to contracts initiated before the fee comes into effect.
A request was made to council to implement a study on the impact of the fees on various businesses throughout the Kingdom.
The minister’s meeting with business leaders comes after many businesses, particularly contracting firms, expressed reservations about the fees that came into effect on Nov. 15, 2012.
Al-Mubti said: “The ministry’s decision caught us off-guard.” He said a number of business sectors employing a large number of expatriates have expressed reservations about the ministry’s decision.
Raed Al-Oqaili, deputy chairman of the Contractors Committee at Jeddah Chamber of Commerce and Industry, said the ministry’s decision would have a negative impact on the national economy. “About 90 percent of the one million workers in the contracting sector are foreigners. This is because most Saudis are not willing to undertake jobs offered by contracting companies as they have to work under difficult conditions,” he added.
Al-Oqaili said: “This decision is going to affect all contracting companies in the Kingdom as there is no company that has an equal number of Saudi workers to foreign workers.”
He said the cost of employment would definitely affect the cost of a project as the contractor calculates the cost on the basis of his expenditures and has estimated the increase in project costs to be at 25 percent.