RIYADH, April 13: Saudi Arabia’s advisory Shura council is currently reviewing a draft law that would tax the earnings of expatriate workers for the first time since the 1970s, a member of the council was quoted on Saturday as saying.

Abdul Rahman al-Ja’afari, head of the Shura’s financial committee, told the English-language Saudi Gazette newspaper that the proposed tax rate would “not be high” and that in some cases it would be less than the 2.5 percent Islamic alms tax that Saudi nationals pay annually.

I would like to assure our brother expatriate workers that the system will not have any negative implications on their income nor would it constitute a financial burden, he said.

Foreign firms operating in the oil-rich kingdom pay an annual corporate tax, but expatriates, which form the bulk of the work force, have not had to pay taxes since the 1970s.

The tax law is part of Saudi Arabia’s efforts to reform its welfare-dominated economy and diversify state revenues away from oil sales, which account for 80 percent of its income.

Last month, Supreme Economic Council chairman Abdulrahman al-Tuwaijri said the Shura council was also reviewing cutting corporate taxes to around 30 per cent from a current 45 per cent to boost foreign investment.

The Shura council has no legislative powers and its recommendations must be approved by the kingdom’s senior leadership before becoming binding. Al-Ja’afri said the council would take at least seven months to finish debating the law.—Reuters