Saudi - 4 conditions laid out for job transfer

MENAFN - Arab News - 19/04/2012

The Ministry of Labor has set four conditions for foreign workers to transfer their iqamas from red or yellow companies to green companies, taking advantage of the Nitaqat Saudization program.

Only those workers who have been in the Kingdom for over six years can avail of this, a ministry source told Arab News. It is also required that the worker must complete at least two years of service in the company that he wishes to leave.

According to the source, the transfer is possible only after the expiry of his work permit. The fourth condition is that the worker would be allowed to transfer to the green only if his company is still in yellow or red category.

The source said that having met these requirements, the worker should produce a request from the new company seeking his service to the labor office to finalize transfer procedures.

According to the Nitaqat program, companies in green category can hire any worker from red or yellow companies without their consent.

Skills test will decide issuance of iqama

By JEDDAH: NADIM AL-HAMID ARAB NEWS STAFF
Published: Apr 17, 2012 00:03 Updated: Apr 17, 2012 00:03

The Ministry of Labor will issue work permits to foreigners on the basis of their performance in the professional skills tests to be conducted by authorities in due course, according to a senior government official.

The workers need not submit any academic or technical certificates showing their qualifications and experience prior to sitting the test, according to Saad Al-Shayeb, director of the Department for Professional Skills Testing at the state-owned Technical and Vocational Training Corporation (TVTC).

He said a consortium led by AwalNet, a leading Internet service provider in the Kingdom, has won the contract worth SR6 billion to undertake the skills testing of more than 6 million foreigners in the Kingdom.

Speaking to Arab News, he said the company has already embarked on this massive task by analyzing the scheme and working out necessary rules and procedures for the test. Al-Shayeb also noted foreigners who fail the test would be given another chance.

In an interview with Arab News, Al-Shayeb spoke at length about various aspects of TVTC’s plan to carry out skills testing. He said the scheme, which aims to increase the professional efficiency and competence of workers in various trades, would be implemented on a PPP (public-private partnership) basis by the end of March next year. “Apart from the foreign workers, passing the test would also be mandatory for those who come on a new labor visa into the Kingdom,” he said.

Shedding more light on the scheme, Al-Shayeb said the test would offer foreigners a new opportunity to improve their skills and consolidate their expertise in their respective fields. It would also help those who have acquired professional competence without obtaining any academic certificate or formal education and training.

Al-Shayeb noted that many foreigners are engaged in jobs other than the original trade on their employment visa. “The scheme to test workers’ skills and issuing work permits on the basis of the test results would contribute substantially to putting an end to this phenomenon and a number of other labor law violations. This has become a matter of serious concern for decision makers at the ministry,” he said.

About the fate of those who fail the tests after their arrival in the Kingdom, Al-Shayeb said the scheme mainly aims at improving the professional competence and work quality of foreigners.

“Of course, this would have a positive impact on the quality of service offered in the Kingdom by the foreign work force. This would also serve the interests of foreigners in the sense that they can improve their skills and expertise after identifying and rectifying their shortcomings,” he said, adding foreigners who fail the test would be provided with training to acquire the required skills and then appear for the test a second time.

Al-Shayeb also noted the rules and regulations for the scheme would be worked out in a way serving the interests of both citizens and foreigners. “TVTC would strengthen its cooperation with all agencies concerned at the ministry to ensure effective implementation of the scheme. We will take advantage of the statistical figures available with these agencies regarding the number of foreigners in trades in which Saudization is to be given prominence as well as the professions involving safety requirements, besides professional standards,” he said, adding the private sector is playing a pivotal role in drafting these professional criteria.

TVTC started elaborate preparations to test workers’ skills following a decision by the Council of Ministers. In an earlier decision, the Cabinet had entrusted the Ministry of Labor to proceed with the scheme to verify the professional competence of foreigners in the local employment market to serve the nation and people in the best possible manner.

Al-Shayeb’s department conducted several comparative studies and took advantage of local and international experiments in professional skills testing while working out the mechanism for the test that would be based on CBI (computer-based instructions) with a focus on practical evaluation. The scheme and its trial process will be complete within 10 months, paving the way for its actual implementation by the end of March 2013

The Shoura Council rejected a move to tax the incomes on expatriate

(MENAFN - Arab News) The Shoura Council rejected a move to tax the incomes of individual expatriate workers in the public and private sectors at its 18th regular session yesterday.
The session was chaired by Council Vice President Dr. Mohammed bin Amin Jafri.
Secretary-General of the Shoura Council Dr. Mohammed Al-Ghamdi said the council made the decision after hearing the arguments for and against the proposal.
He added that since proponents of the move could not attain the requisite majority in the house to secure approval, it was rejected. He said the Kingdom is implementing a number of developmental projects in various sectors that need professional skills.
Supporters felt if approved, the proposal would have helped bridge the gap between the wages of Saudis and non-Saudis and increased the chances for locals to work in the private sector. Al-Ghamdi clarified the proposal had been submitted some time ago.
News that the debate on the issue had been revived had drawn criticism from the expatriate community, especially low-paid workers.
According to a local newspaper, the finance committee of the Shoura Council has recommended carrying out fresh studies on the possibility of imposing tax on all foreigners working in both the public and private sectors in the Kingdom.
The source said the new proposal was made by council member Muhammad Al-Quwaihes, who presented it as an additional recommendation attached to the annual report of the Department of Zakat and Income Tax that had already been discussed by the house.
"The government is neither levying a single riyal in tax or Zakat on foreign workers remittances, nor do they need to pay any kind of taxes," Al-Quwaihes said.
An expatriate, Sauda Salem, expressed dismay at the possibility foreign workers may have to pay income tax.
"It is a great shock for all expats who are not managers or making good money," he said.
As most foreigners are unable to meet their expenses, their wives try to support them by working small jobs, he added
"I request them to reconsider the plan of taxing expats only to support Saudization," he suggested.
Another expat, Mohammad Nazeer, claimed expatriates would be happy to contribute to the Saudi economy by paying income tax on their salaries and bonuses, adding they were very grateful for the generous tax-free salaries and benefits enjoyed in Saudi Arabia.
Another worker, Tanveer Ahmad, was willing to pay Zakat as long as the money went to the needy.
"As a Muslim, in order to make my earnings fully Halal, I should pay 2.5 percent of my earnings toward Zakat. I do pay it, but only in my native country where there are needy people. I have no objection to paying Zakat here if the government makes sure it goes to the needy," he said
According to Shoura member, Al-Quwaihes, levying an income tax on foreigners would boost the ongoing Saudization drive. "Foreigners working in the Kingdom transfer about SR100 billion to their countries of origin annually," he said.
Al-Quwaihes noted most countries in the world impose income taxes on individuals who work and earn money in those countries.
"It is high time we impose income tax on foreigners. It is also to be noted that foreign workers are beneficiaries of all government support and subsidies on utility services and products such as water, electricity, wheat, and petroleum products," he said.
Nearly a decade ago, the Shoura Council reviewed the possibility of imposing taxes on foreign workers but later the proposal was shelved.
There are 8 million foreigners in the Kingdom, an overwhelming majority of them in the private sector.
For another expatriate, Dr. Victoria Charlston, imposing taxes on foreigners would mean the job market would instantly lose many of its Western professionals.
"Financial reward is pretty much the only reason why Westerners decide to spend a stint of their working lives in KSA. There is little other reason or incentive. Let's hope that KSA will have enough of its own educated, highly trained manpower who will fill the gap if expatriates leave."
She said taxing non-Westerners earning low salaries for their hard labor was akin to daylight robbery.
"They have so few rights compared to their fellow countrymen who happen to live and work in other countries around the globe, and to tax them would be another nail in their coffin," she said.
"Should taxes be imposed on all foreigners, and this term in itself is laughable as many so-called foreigners are third and fourth generation citizens who would long ago have enjoyed equal rights to citizens should they have settled elsewhere in the world, then they should immediately and justly be afforded similar status to KSA nationals.
"Furthermore, to repeatedly discuss and question in newspaper columns these workers' rights to send their hard earned money to their relatives overseas is quite frankly a disgrace. Their money is simply the fruit of their labor, to dispose of as they wish.
"They have not been lazily sitting on their backsides waiting for money to be deposited in their bank accounts, as many of KSA's youngsters do. When one makes the decision to work in KSA, one immediately has to give up certain aspects of life that would be enjoyed in one's homeland. This sacrifice is offset by a rewarding salary."
Both Saudi and expatriate employees working in the Kingdom had to pay income tax until it was abolished in 1975. Later, there were moves to reintroduce income tax on foreigners in the late 80s. However, in 1988, King Fahd scrapped the plans.
At present, only Saudi citizens and Saudi companies need to pay Zakat of 2.5 percent annually on profits and on the assessable amount for individuals, in addition to a tax on foreign investors. In a bid to attract more foreign investment into the Kingdom, the government slashed in 2004 the tax rate imposed on foreign investors from 45 to 20 percent

Taxing expats under spotlight

Shoura panel seeks income tax for expats
saudigazette

RIYADH — A Shoura Council committee has proposed that foreigners be taxed on the money they earn in the Kingdom.
Muhammad Al-Qouwhis, a Shoura Council member, said his income tax proposal was adopted by the Council’s finance committee. The committee has proposed a study on the matter.

Al-Qouwhis was quoted Friday in a section of the Arabic press as saying that his proposal would apply to foreigners working in both public and private sectors. He said he also submitted an additional memo on the issue. He said that more jobs will become available for Saudis if it becomes more costly to recruit foreign workers.
Al-Qouwhis said the remittances of expatriates was over SR100 billion last year. He added that foreign workers in the Kingdom do not pay any Zakat (mandatory individual offering for the needy in Islam).

He said most governments impose income tax on persons working in their countries. It was high time the Saudi government did the same because foreigners are benefiting from subsidized services and essential consumer products.

Expatriates account for nine out of 10 private sector jobs in the Kingdom. They fill roles that range from domestic service and factory work to management positions in large finance companies.

The value of their remittances has increased in the past five years from an officially recorded SR15.3 billion in late 2006. The true figures for money outflows were probably much higher because they did not include informal transfers.

Most of the money is thought to be remitted by lower-paid workers who frequently carry cash with them on trips home rather than making formal bank transfers. Higher-paid workers tend to spend more of their income inside Saudi Arabia because they are more likely to bring their families with them.
In January 2003, the Shoura rejected plans to impose an income tax on expatriate workers whose salaries exceed SR3,000 per month. The Council decided that it was inappropriate to levy taxes on the salaries of non-Saudis regardless of the amount of their pay. — SG

Taxing expats under spotlight

By RIYADH: ARAB NEWS

Published: Mar 30, 2012 23:56 Updated: Mar 30, 2012 23:56

The long pending issue of imposing income tax on foreigners would come up again for discussion at the Shoura Council on Sunday. The finance committee of the Shoura has recommended carrying out fresh studies on imposing tax on all foreigners working in both public and private sectors in the Kingdom, Al-Riyadh newspaper reported yesterday.

The new proposal was made by Muhammad Al-Quwaihes, member of the Shoura, who presented it as an additional recommendation attached to the annual report of the Department of Zakat and Income Tax, which had already been discussed by the Shoura.

According to Al-Quwaihes, levying income tax on foreigners would be helpful in further boosting the ongoing Saudization drive. “Foreigners working in the Kingdom transfer about SR100 billion to their countries of origin annually.

The government is neither levying a single riyal in tax or Zakat on their remittance nor do they need to pay any kind of taxes,” he said.

Al-Quwaihes noted that most of the countries in the world impose income tax on individuals who work and earn money in those countries. “It is high time to impose income tax on foreigners. It is also to be noted that foreign workers are beneficiaries of all government support and subsidies given to utility services and products such as water, electricity, wheat, and petroleum products,” he said.

Nearly a decade ago, the Shoura Council reviewed the possibility of imposing taxes on foreign workers but later the proposal was put on the shelf. There are eight million foreigners in the Kingdom, an overwhelming majority of them working in the private sector.

Both Saudi and expatriate employees working in the Kingdom had to pay income tax until it was abolished in 1975. Later, there were moves to reintroduce income tax on foreigners in late 80s. However, in 1988, King Fahd scrapped the plans.

 At present, only Saudi citizens and Saudi companies need to pay Zakat of 2.5 percent annually on profits and on the assessable amount for individuals, in addition to a 45 percent tax on foreign investors.

In a bid to attract more foreign investment into the Kingdom, the government slashed, in 2004, the tax rate imposed on foreign investors from 45 to 20 percent.