Wednesday, January 11, 2017

Who will pay the newly imposed dependent’s fee as per Law? Employer?

With the approval and announcement of the Saudi Budget for the year 2017, Saudi Arabia has taken many revolutionary decisions to reduce its dependence from the oil. They are striving to increase the Non-Oil revenue to support their spending and bring stability in their economy. One of the steps taken by the Saudi Government in the budget is application of dependent’s fee on expatriates. Saudi Government has imposed an annual fee on dependents of expatriates from July 2017 which will be paid at the time of Iqama Renewal. Moreover, the Labor Office fee which is currently SR 2,400 per annum will also be gradually increased to SR 9,600 by the year 2020. Recommended: New Dependent’s Fee in Saudi Arabia? How to avoid it for the year 2017?

Now a basic question arises, who will pay the cost of newly imposed dependent’s fee and increased Iqama fee? What does the Saudi Law state about it? We have answered this question in detail below. Let’s start with the Iqama Fee of SR 2,400. Right now, the employers who have less than 50% Saudization percentage must pay SR 2,400 per annum for the renewal of their expatriate employee’s iqama. This Iqama fee is the responsibility of the employer but sometimes employers illegally ask employees to compensate them. This Iqama fee is scheduled to increase to SR 4,800 in the year 2018 and SR 7,200 in the year 2019 and SR 9,600 in the year 2020. Legally, this will remain the responsibility of the employer to pay this cost. However, it will increase the cost of expatriate employees and employers would prefer to hire Saudis over expatriates.

The Dependent’s fee is going to be implemented from July 2017. If your iqama is renewed after July 01, 2017, you will have to pay SR 1,200 per dependent to the Saudi Government. This fee will be increased to SR 2,400 in the year 2018, SR 3,600 in the year 2019 and SR 4,800 in the year 2020. In other words, if you have 3 children and a wife who are Iqama holders, you will have to pay SR 19,200 as dependent’s fee in the year 2020 and your employer will have to pay SR 9,600 as your Iqama fee. In aggregate, it is a payment of SR 28,800 to renew your iqama.

Now coming back to the question, who is responsible to pay this cost? Well, right now there is no provision in the law which addresses this issue. Apparently, it looks like the responsibility of the expatriate employee to pay the dependent’s fee. However, there is still a way you can transfer this liability to your employer. At the time of renewal of your contract, you can ask your employer to change the terms of the contract to include the clause that the dependent’s fee is the responsibility of the employer and not the employee.

In simple words, it is expatriate employee’s responsibility to pay off this fee but if it is agreed between you and your employer, Saudi authorities don’t have any problem. Similarly, people who want to come to Saudi Arabia may ask their employers to shoulder the burden of dependent’s fee in the process of negotiations and before signing the contract.

Other Laws of Saudi Arabia
  1. Who is responsible to pay the cost of transferring sponsorship in Saudi Arabia?
  2. Who needs to bear the cost of Exit Re-Entry Visa?
  3. New Dependent’s Fee in Saudi Arabia? How to avoid it for the year 2017?
  4. 8 Important Points about Saudi Budget 2017, everyone should know
  5. 5 Reasons due to which an employee of the Masjid can be dismissed by the Ministr


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