What is the truth about the 10% tax on salary rules?

I believe half of you have got this PDF file in your email, WhatsApp, or Facebook accounts, claiming that the Ministry of Labor has approved two new rules that will be enforced in a few months.

On my WhatsApp number, I’ve got multiple messages inquiring about the validity of this restriction. I’ve decided to publish the specifics here because I won’t be able to personally respond to everyone of them. Let’s take a closer look at this viral PDF file.

There are two rules in it, and I’ll explain why I think they’re important.

RULE ONE: “The Saudi Arabian Ministry of Labor has made a resolution to levy a tax of 10% of total basic income on expats earning more than (3000) Saudi Riyals, which will be enforced within the next few months.”

Such tax shall be deducted from the whole sum of salaries of private firms and establishments by the bank to which such salaries are transferred, provided that such deduction shall be made from the salaries of expatriates.

Financial authorities, represented by the Ministry of Finance, the Saudi Arabian Monetary Authority (SAMA), and other relevant institutions, have stated that this project will be completed automatically in the near future.”

Answer by LOA on Rule One:

In the first rule, they’re referring to a decision made by the Ministry of Labor to levy a 10% tax on expatriates having an annual income of SR 3,000 or more.

First and foremost, the Ministry of Labor does not have the authority to make this decision. The Ministry of Finance oversees the Zakat and Income Tax Departments, whereas the Ministry of Labor has no involvement with the tax.

Only the Ministry of Finance has the authority to make this decision, and they have yet to do so.

Second, the tax will be collected by banks, according to the law. I’ve worked in a number of countries and have never witnessed banks deducting income tax from transferred salaries. It is always the responsibility of the corporation to subtract income tax from the tax and deposit it with the DZIT.

RULE TWO: “In Saudi Arabia, the Ministry of Labor has launched an extensive campaign to reduce the number of expatriates working in the private sector by imposing fees on their jobs, to encourage the private sector to employ Saudis, and to spend the revenue generated from such fees to benefit the Human Resources Fund, which was established to contribute to the nationalization (Saudization)of jobs in the Kingdom.”

The Ministry reaffirmed that it will work to prevent the recruitment and renewal of work permits for about 60 professions, and that companies and establishments must replace those in such jobs with Saudis in the coming months, as well as limit sales to local citizens and stop recruitment for 23 commercial activities.”

Answer by LOA on Rule Two: There is no doubt that the Ministry of Labor has been working hard to improve the Saudization level in Saudi Arabia.

However, the Ministry of Labor has yet to make an official saying that 60 occupations are prohibited for expats working in Saudi Arabia.

This link contains the most up-to-date list of occupations that are only open to Saudis.

Recommended: Saudi Arabia has a list of professions that are only available to Saudis.

I think I’ve explained why you shouldn’t trust the facts in this PDF document. If someone sends you these PDF files in the future, you can respond with this article.