With the Saudization of gold and jewellery shops to commence in 5 days, hundreds of shops are at a threat of closing down soon.
The Ministry of Labor and Social Development issued an order last month demanding gold and jewellery shops to adhere to the Minister’s decision issued earlier in 2007 to nationalize gold and jewellery sector.
Mohammed Jameel Azouz, deputy chairman of the precious metal and gemstones committee asked gold and jewellery shops to employ Saudi citizens in all salesman positions in two weeks.
Khalid Aba Al-Khail, spokesperson for Saudi Ministry of Labor and Social Development at the Jeddah Chamber of Commerce and Industry (JCCI) said that Saudi’s are particularly uninterested in working in the gold and jewellery sector and the ministry should reconsider the decision as many jewellery shops are struggling to find eligible Saudi employees.
Several workshops and training courses have been conducted to train young Saudi’s to work in the gold market, but most of them found the job unappealing in comparison to the more attractive and secure jobs in the government sector, he added.
As a result, many businesses would be affected with the ministry’s decision to nationalize gold and jewellery shops in less than two weeks. He said out of 330 gold and jewellery shops in Jeddah, he personally believes Saudization would lead to closure of 30 percent of the shops and others will reduce the number of branches.
With the introduction of Value Added Tax (VAT) from January 1, 2018 the Kingdom will witness a sudden increase in price of goods and services.
Khalid Al-Zaidi, a financial analyst and director of Jeddah based Al-Zaidi Financial Education Center, said the increase in price followed by a drop in demand for goods will affect businesses adversely causing them to adopt new strategies and policies to keep their business running.
If the price hike leads to reduction in quality of commodities and services, then it would be a negative indicator for the country, he added. Moreover, the price hike will force consumers to find alternate ways to save money.
Al-Zaidi anticipated a sink in the demand for luxury commodities and accessories.
With the opening of international markets through e-commerce as well as consumers looking for cheaper alternatives, companies will look forward to provide the best service at competitive prices.
If the implementation of VAT is found to be a boost to the country’s economy and has helped to rationalize the consumption habits of the citizens, then, the government will most probably impose tax on additional sectors or increase the percentage of VAT to more than 5 percent in future, added Al-Zaidi.
The implementation of VAT on petroleum products will reduce the domestic consumption of oil products thereby increasing the quality of the country’s oil reserve. With increased oil export to the global market, Saudi Arabia can attain a leading global position and improve its oil pricing policy within the Organization of the Petroleum Exporting Countries (OPEC).
Al-Zaidi said that small and medium sized companies and organizations would find it extremely difficult to survive with the implementation of VAT. Moreover, the imposition of VAT on private education is highly challenging as students have already begun migration to government run schools.
Since the commencement of VAT registration on August 28, 2017, more than 60,000 businesses have completed its registration procedures. The General Authority of Zakat and Tax (GAZT) encouraged businesses earning more than SR 1 million to speed up their VAT registration process.
Saudi Arabia’s Council of Cooperative Health Insurance warned hospitals and health facilities against demanding a cash payment from insured patients.
The Council received several complaints against hospitals that refused to accept insurance claims and forced patients to pay in cash.
Yasser bin Ali Almuaarek, spokesman for the Council of Cooperative Health Insurance, reminded that this is a violation of the council’s policies and hospitals and health facilities violating these policies will be subjected to severe punishments including suspension.
He urged health facilities to conform to demands of the accreditation of service providers as well as to provide timely services and avoid delays in sending approvals to insurance companies, as per article 90 of the executive legislations.
The Council came with an explanation after repeated complaints and an investigation published in Al-Eqtisadiah newspaper.
The Communication and Information Technology Commission (CITC) announced that entering ID number or Iqama number along with prepaid card number is not required for recharging pre-paid mobile phones from November 15 onwards.
Earlier in 2012, CITC made it necessary to enter iqama number while charging, recharging and transferring balance via prepaid cards. Its aim was to deactivate all illegally obtained prepaid sim cards.
Meanwhile, with the implementation of Value Added Tax (VAT) from January 1, 2017, telecom services such as mobile phone, fixed line, data and digital services will be subject to 5 percent VAT. This will lead to reduced talk-time for prepaid customers, for instance, a prepaid voucher of SR 100 will only offer a talk-time of SR 95. On the other hand, post-paid users are likely to obtain bills with VAT added to it.
Saudi Arabia will no longer allow immediate test for driving license applicants without attending training sessions, announced Brig. Gen. Mohammed Abdullah Al-Bassami, director general of Traffic Department.
Anyone wishing to obtain a new driving license should attend a 30-hour, 90-hour or 120-hour training course depending on their level of proficiency. Applicants with a good driving experience can attend the test after attending a 30-hour training session while the less experienced applicants should opt for a longer duration training session, said Al-Bassami in a press statement to Saudi Press Agency.
With the end of an eight-month long amnesty in Saudi Arabia, the Ministry of Interior launched a massive anti-illegal residency campaign starting from November 15, 2017. About 7,500 illegal residents and violators of labor laws were arrested by the Saudi security forces on the first day of the operation.
Earlier this year, as part of “Nation without a Violator” campaign, the Ministry of Interior announced a three-month grace period for all violators of residence and labor laws from March 29 onwards during which they could leave the Kingdom without any penalties. However, the grace period was extended several times on the request of some embassies and finally ended on November 14, 2017.
Interior Ministry spokesman, Maj. Gen. Mansour Al-Turki said the new campaign targeted on both expats without residence permits (Iqama) and those with expired residency documents. It also warned Saudis and legal residents of strict punitive measures if found hiring, sheltering, transporting, operating or supporting illegal residents, labor law violators, and border security violators.
Al-Turki added that the campaign targets violators of labor and residency laws equally without any distinction between Saudis and expatriates.
Security forces and as many as 19 government agencies are on an intense mission to crack down all violators who are still in the Kingdom after the end of the grace period. Khalid Aba Al-Khail, Ministry of Labor and Social Development spokesperson explained the campaign to be a national task that would contribute many positives to the Kingdom.
Lt. Col. Talal Al-Shalhoub, representing public security asked the citizens to cooperate with security authorities in reporting violators by calling 911 in Makkah and 999 in other parts of the Kingdom.
Border Guards spokesperson Col. Sahir Al-Harbi claimed turning down more than 21,000 illegal entry attempts to the Kingdom and 872 residency violators from leaving the Kingdom illegally.
The General Directorate of Passports (GDP) clarified through its official twitter account that it would offer a grace period of 60-days for residents to leave the country after the issuance of their Final Exit Visas.
Moreover, despite the end of the “Nation without a Violator” campaign, this grace period can be utilized by residents with an expired residence permit (Iqama).
A report by Jadwa Investment Company (JIC) revealed that expatriates in Saudi Arabia have encountered a huge drop in employment opportunities in the second quarter of 2017.
According to the report, there has been a drop of around 161,500 new job openings for expatriates in the last four months. Moreover, with the implementation of dependent fees, there has been an increase in the number of expatriate families returning home. This has reduced the employment of non-Saudi women largely.
At the same time, with 28,900 new job openings, the employment rate of Saudis has shown an upward trend, of which 60 percent are men and the remaining are women.
The report also highlighted the increase in rate of Saudization of jobs from 42.5 percent in the second quarter of 2016 to 43.1 percent in 2017. This aided in reducing the unemployment rate among the Saudi youth by around 15.9 percent.
Meanwhile, the Kingdom is on a move to localize all economic, commercial, industrial and service oriented jobs gradually, said Ali Al- Ghifais, Minister of Labor and Social Development. He also added that the ministry is currently involved in the third phase of Saudization which focusses on restricting jobs in malls and commercial centers to only Saudis. As a result, 80 percent of jobs in these areas have already been Saudized. Moreover, all jobs available in sales points will soon be localized.
The Nitaqat programs undertaken by the government as well as the imposition of dependent fees on expatriates have caused a large population of non-Saudis to leave the Kingdom.
The change of job-titles in Iqama (resident permit) has been halted by Saudi Arabia’s Ministry of Labor and Social Development (MLSD). The ministry also informed that those who are restricted from changing the profession in their iqamas can challenge this decision online.
Earlier a four-week grace period was given to companies and businesses involved in activities other than those in which they have been registered. With the end of this grace period this week, inspections will be carried out by the ministry and violators will be fined SR 25,000.
The Ministry will also gradually stop compensatory work visas after changing the ratio and modality of counting the rate of Saudization.
Meanwhile, private sector jobs can be taken up by Saudis over 60 years without being counted while calculating the rate of Saudization.
The General Authority of Zakat and Tax (GAZT) has published the implementing regulations of Value Added Tax (VAT) through their website, vat.gov.sa which defines various exempted activities in the financial sector.
Loans, credit cards, finance leases, mortgages, security transactions or bank notes, current accounts, deposits and savings account fall in the category of exempted activities.
For transfer of funds, the amount transferred is exempted from VAT, but a transfer fee of 5 percent will be charged on the person transferring the money.
Businesses involved in economic activities subject to tax will be given permission to recover the VAT amount they paid on their taxable goods. However, entities involved in economic activities exempted from tax are not entitled to recover the VAT they paid on their taxable goods.
As per the Unified Agreement for VAT in the GCC countries, VAT will be implemented in Saudi Arabia from January 1, 2018 onward.