Most of the expat families are finding it difficult to manage and make ends meet in the Gulf states post the implementation of new tax on dependants. In Saudi Arabia, the fee for each expat is 100 Saudi riyals per month.
The decrease in oil prices have further worsened the situation as the GCC states are forced for economic reforms, and to find sources of income to balance the deficit in budgets.
Bahrain, Oman, Kuwait, Saudi Arabia, Qatar and the UAE have all increased fuel prices, service fees along with the reduction in subsidies of basic supplies.
Saudi Arabia, the biggest state in the GCC was the worst affected. Economists have sounded the alarm about the need to diversify the economy since the second half of the 1980s following the major fall in oil prices.
The states have started to diversify their source of revenue. Bahrain was among the first countries to choose diversification. The kingdom which prides itself on successfully “managing to adapt to new economic realities” has identified five non-oil industries expected to drive its future growth -financial services, industrial and manufacturing, logistics, tourism and information communications technology (ICT).
The lawmakers are batting for measures that would make expats in the country pay more for services. This year, the government had to step in strongly to resist a motion by lawmakers to make foreign students pay 400 Bahraini dinars each annually to study at state schools.
However, businessmen have warned against decisions that might affect the status of the expat community. “I am confident that we will pull through the decline of oil prices in the Gulf,” Khalid Esmail, a businessman, said.
“There should be no panic and we will overcome it with the minimum of losses. At the same time, there has to be a reconsideration of some not-so-essential projects that could be delayed or even cancelled. We may have a gradual introduction of some taxes on some companies, but the expatriates, the most vulnerable link in the chain, must not be abused by populist or not carefully studied decisions.”
Meanwhile, Darweesh Al Mannai denied that expats would vacate because of the increase in fees and costs resulting from the drop in oil prices. However, he said that people should appreciate that the imposition of taxes and the increase in fees and prices were inevitable.
“There is a deficit in the state budget and it needs to be addressed as we go through very difficult times in the region,” he said.
He also explained that companies would look to reduce the expenses and find new ways to boost their productivity instead of increasing their prices and reducing their competitiveness edges.
Latheef, an Indian who has been working in Bahrain for 25 years, said that he felt the pressure of mounting commodity prices and service fees.
“It is not easy for me like it was before, but I do not complain,” he said. “I wish they would not take further decisions that would make it difficult for us to stay like in other countries. So far, I have not heard of friends who wanted to leave and go back home, but if there are new hikes, then that possibility, no matter how painful it may seem at first, cannot be ruled out.”
On the other hand, Kuwait has decided to reduce the number of expats. Emir Shaikh Sabah Al Ahmad has called for “speedy and serious economic reforms to diversify the economy and to find new sources of financing.”
The lawmakers believe that cutting down on the number of expats is the easiest method to bring things under control. The expats make up more than two thirds of the total population. They also want to increase the taxes and fees for all the services.
Lawmakers argue expats are taking jobs from Kuwaiti citizens, draining public resources and taking money away from social spending meant for Kuwaitis.
Meanwhile Saudi Arabia has implemented the new dependents’ tax from July. The move might see many expats leaving the country as it would be tough to manage the expensive lifestyle.
“I was born here, schooled here, worked here and married here. This is the only place that feels like home. Although, we visited India every year on our two-month summer holiday to meet our relatives, we yearned to come back here,” said 40-year-old Amal Hussain, a resident of Makkah.
She added: “Even my parents were born and brought up here (Makkah). Most of my relatives are also here. This place never seemed foreign to us. In fact, we feel foreign when we go to India.”
Pakistani national Hira Zulifiqar, a resident of Jeddah, said that she’s not visited her motherland in years. “I visited Pakistan a few times with my parents and siblings, but we never adjusted with the lifestyle there for even few days. We would always return before our scheduled departure.”
The thought of leaving Saudi Arabia is nothing less than a nightmare for most expatriates. “The mere thought of leaving this place makes me cry,” said Hussain.
According to the directives issued by the Ministry of Finance in Saudi Arabia, the fee for each expatriate is SR(Saudi Riyal)100 (Dh98) for each dependent per month this year, SR200 in 2018, and SR300 and SR400 in 2019 and 2020 respectively.
“The taxes have made our future quite uncertain. My father can manage to pay the tax for only a year for my four siblings, my mother and I. Next year, we may have to go back to Pakistan if my father doesn’t make enough in his business,” said Zulfiqar.
“We came here to give our two children a better lifestyle to and save for their future, as my husband had better work opportunity here. But, since his company won’t pay family tax, we don’t know what to do,” said Rashmi Desai, who moved to Jeddah 10 years back with her husband after marriage.
Some expatriates whose children study in international schools have planned to leave for good after their children’s school year comes to an end. They say the going is tough with the dependents’ tax, which has led to a hike in school fees and inflation in the prices of basic commodities.
“I am just waiting for my children to finish their final exams in March next year, and then we have planned to leave. The taxes are increasing every year and everything has become expensive. Even these few months are quite difficult,” said Umm Zahrani.
“The dependents’ tax and costly education forced us to leave,” said Iman Wajih.
Kashif Mirza, a father of seven, said has arranged for his family to move back to Pakistan in the next few days. “I respect the laws of the Kingdom, and I feel our time here has come to an end.”
However, some expats who are now willing to leave the country are compromising by moving into smaller houses and admitting their children in low-fee schools. Zeeshan Aslam, a father of two children, said that if his family wants to live here, they would then have to compromise their lifestyle in every aspect.
“We will have to live on a tight budget if we plan to stay here. How much it will help, I don’t know.”
“We are thinking of sharing apartments with another family from our country. With the high school fees, we don’t have the luxury to live independently,” said a Filipino national, who didn’t wish to give his name.
The people who want to stay back have to pay the dependents’ tax before Iqama (resident permit) renewal. Those expatriates who plan to leave for good will have to pay the tax for the remaining year before they are given the final exit approval.
Dependents include wife or wives, children, parents, domestic worker or any person registered as sponsored by the expatriate worker.