Bad times for Indians abroad: US changes H1B visa rules, Saudi introduces tax

While in the US, the tweaked H-1B rules will hit the prospects of Indian techies, in Saudi Arabia the newly introduced value-added tax will increase the cost of living of Indians staying there. 
Image used for representational purpose only
Image used for representational purpose only

Even as the Donald Trump administration’s decision to tweak H-1B visa rules in the US affects the prospects of Indian techies, the savings of about 3 million Indians living in Saudi Arabia could end up taking a hit as the hitherto tax-free nation has introduced value-added tax, leaving less income for savings, which could reduce NRI remittances to India.

In the United States, a legislation has been introduced to more than double the minimum salary of H-1B visa holders from the current figure of $60,000 to $130,000. While on the face of it, this looks good, the move was made in a bid to stop American firms from hiring less expensive foreign labour, including from India.

According to California Congressman Zoe Lofgren, who introduced the High-Skilled Integrity and Fairness Act of 2017, “It offers a market-based solution that gives priority to those companies willing to pay the most. This ensures American employers have access to the talent they need, while removing incentives for companies to undercut American wages and outsource jobs.”

In related development, Senator Sherrod Brown has announced to introduce H-1B and L-1 Visa Reform Act in the Senate which he said would close loopholes in the H-1B and L-1 visa programs and provide increased protections for both American workers and visa holders.

"We need to crack down on the fraud and abuse that allows corporations to avoid paying Americans fair wages and exploit foreign workers," said Brown.

As for Saudi Arabia, where about 3 million Indians live and work and send home about $10.51 billion in remittances to India, of the total $70 billion from around the world, a newly introduced value-added tax could increase the cost of living in the hitherto tax-free country, leaving fewer savings for Indians to send home.

Following an oil slump in the world’s largest oil exporter and largest economy in the Arab region, Saudi Arabia has already made unprecedented cuts to fuel and utilities subsidies. Now the Arab kingdom has prepared a Royal Decree to levy a 5 per cent tax on certain goods, following an agreement at the Gulf Cooperation Council in June last year. The tax is set to be implemented across all GCC countries, including the UAE which has another 2 million Indians in its workforce.

What's more, Saudi Arabia in its Budget last month has already proposed to levy fees on each dependent of an expat worker, starting  from July 2017.

According to the proposal, expatriates in the country, including Indians, will have to pay 100 Saudi riyals a month to the passport office, for every dependent person (spouse or children). This fee is to be paid at the time of renewals of Iqama, the residence permit issued to expatriates who are in Saudi on employment visas. Iqamas are typically renewed every year. This fee will be increased to 200 Saudi riyals in 2018, and SR300 the following year.

(With inputs from PTI and AFP)

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