6 Disadvantages of Dependent’s Fee to the Saudi Economy

The dependent’s fee has been discussed since its imposition. The experts have been giving their reviews since the news became official that all expats living in the Kingdom would be liable to pay a dependent’s fee except few categories of Expatriates who are exempt from Dependent’s Fee. The government urged that there was a need to impose the dependent’s fee as it would benefit the economy.

Many economists gave their view that it would be beneficial for the Saudi economy as a whole. For instance, some said that it would help get rid of surplus expats. All it would help raise government revenues which will eventually offset the budget deficit.[irp]

It will be a way to employ our nationals by replacing them with expats. Also, our demographic statistics are quite imbalanced, 40% of our population is composed of expats. By levying a dependent’s fee, we can regain demographic stability. Also, some argued that this step would help save public utilities.

But this is only one side of the picture. Not all policies can actually pull out the desired outcomes. There are some negative impacts on the economy as well. So where all are talking about the pros of the expat dependent’s fee, we are to highlight the cons of the fees.  We have jotted down 6 disadvantages of the dependent’s fee to the Saudi economy;

1-The revenues are sure to be generated by imposing and collecting the dependent’s fee. Yet these revenues do not hold any added value. The reason behind it is that such revenues are not a source of attractive investment. So revenues without added value are not useful for the economy

2-The private sector shall experience a decline as the economy will proceed towards slowing down. Saudi Arabia’s private sector is of great importance to the economy, with its decline, most of us shall suffer!

3-The people falling under the category of low-income shall experience a decline in their standards of living. The costs are expected to rise which shall increase the cost of living yet declining the standard of living.

4-When we boost upon the dependent’s fee claiming that our Saudi nationals will get employed, research proves us wrong. See, most of the expats are hired in technical, vocational and technological fields. So not many Saudis out there would be gaining by the imposition of the expats dependent’s fee.

5-Many nationals are to face unemployment as companies will close down. Some firms cannot run with the burden of the dependent’s fee and would eventually shut down. Our nationals employed in such firms would be rendered unemployed.

6-As dependents would be leaving the Kingdom (as many have), they would be spending money at their homeland. Not only we will be under a burden of foreign remittances but also our product’s demand would fall. Our companies shall face a decline in their profits!

So, our conclusion is that the policy is not a healthy policy for the Saudi Economy. Its disadvantages are far devastating than its advantages. Our policymakers need to rethink because what really matters is the benefits of Saudi Arabia![irp]

Featured Comment 

Anwar: According to my understanding, the Saudi government can gain more if they really want to get stabilize by dependent fees. The Government should only charge SR 50 per dependent per month, without any further increase till 2020.

Let’s assume there are 5,000,000 dependent expatriates living in Saudi Arabia. By applying SR 50 per dependent, the Saudi government will make around SR 250 million a month i.e. SR 3 billion per annum and SR 9 billion in 3 years. Not only this, by keeping these expatriate families in Saudi Arabia, the Saudi government is reducing the potential of foreign remittance. There will be some other benefits of this reduced fee;

1-Expatriates easily and Happily pay, private organizations N need to worry.

2-Day today Business will also run well.

3-Peace of mind for the employees and dependents

4-Good for Value Added Tax Collection

5-Less remittance burden on the Government, etc.

6-Happier Saudi Businessmen as these expatriates and their dependents spend money in the Saudi Economy

7-Happier Landlord – you must have noticed that there are flats for rent everywhere. Saudi landlords have been reducing rents significantly to retain their tenants. If Saudi Government takes these measures, these landlords will be happier.

Get Latest Updates: You can join our WhatsApp Group to get the latest updates and news from the website.