Public sector contractors exempt from workers’ tax

newsimageRIYADH — The Council of Ministers has announced that contractors working on public sector projects before the decision to impose workers’ tax are exempt from paying the levy. All contractors working on public sector projects that began before the decision was issued in December 2016 will be exempt from expatriate workers’ tax. The exempted contractors include those who are currently working on projects scheduled to be completed after 2018, Al-Watan Arabic daily said. A committee will be formed to set procedures for compensating projects that have been hindered due to the decision. The exemption was decided after the Council of Saudi Chambers approached Crown Prince Muhammad Bin Salman, deputy premier and minister of defense and head of the Council of Economic and Development Affairs (CEDA). The Council of Saudi Chambers requested the Crown Prince for a review of the proposed expatriate workers’ tax. It argued that the decision could disrupt the workflow and seriously affect the budget of the project. The council further argued that because of the cash crunch, the contractors may not be able to pay wages to their workers which could impede the flow of work. It said the same was the case when new fees was levied on the issuance and renewal of operation licenses. Such inconveniences could hinder the project from achieving the goals of Vision 2030, the council petitioned. Public sector projects usually take 3 to 5 years to complete. Companies plan their budget per project and the budget is usually meticulous and accurate from calculating the expenses of the materials to calculating the salaries of the workers. Any additional expenses could be detrimental to the sustainability of the project, the council said. The Council of Saudi Chambers also requested to allow hiring of expatriate workers in fields where qualified Saudis are not available. Such fields include cleaning works, sewer work and others. The CEDA forwarded the proposal to the Cabinet and urged a reply to the proposal within 60 days. The Cabinet held a meeting with its Commission of Experts and the latter approved the proposal after studying its feasibility.