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13 February 2019 - SAUDI ARABIA
Executive summary
The Ministry of Labour and Social Development announced that select employers will be eligible for reimbursement of a monthly fee they must pay for each foreign employee under their sponsorship.
The Ministry of Labour and Social Development (MLSD) announced that select employers will be eligible for reimbursement of a monthly fee they must pay for each foreign employee under their sponsorship.
Eligibility conditions
According to the MLSD’s announcement, employers with a Nitaqat rating of low green, medium green, high green and platinum for the past 52 weeks will be eligible for the fee refund or will be exempt from the payment, depending whether they have already settled their dues or not. Companies classified as yellow and red will be eligible for the refund only if they improve their Nitaqat rating (to at least low green) within 12 months from the start date of the initiative.
Background
Effective January 2018, employers in Saudi Arabia are subject to a monthly fee for each foreign employee under their sponsorship. The amount of the fee depends on whether the employer has
more foreign workers than Saudi workers, and the fee increases annually.
Companies with a total headcount of five or fewer workers are exempt from the levy, while those with six to nine employees must pay the fees for the number of workers exceeding five.
In general, employers must settle their bill in a form of a one-time lump sum payment in the beginning of the year (which is referred to as ‘a collective invoice’), although the MLSD also allows for quarterly instalments.
The imposition of the expat levy was strongly criticized by private sector employers especially in the construction industry and by business owners of small and medium enterprises and led to some further exemptions announced at the end of March 2018.
How Fragomen can assist?
Fragomen will continue monitoring the situation and will revert with additional information as developments occur.
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