Banking, Money and Taxes in Saudi Arabia
Saudi Arabia has always been one of the most economically sound countries in the Middle East, and even now continues to show increases in employment opportunities and production despite instances of surrounding recession. It follows that the banking system in Saudi Arabia is relatively robust and has managed to put a progressive foot forward for the last decade.
Expats moving to Saudi Arabia can be fully confident in the banking aspect of their transition. Based on the intake of high oil revenues and regulatory actions of the Saudi Arabia Monetary Association (SAMA), no bank has ever failed in the country.
Saudi Arabian currency
The currency in Saudi Arabia is the Saudi Arabian Riyal (SAR), which is divided into 100 halala. Notes are in denominations of SAR 500, 100, 50, 10, 5 and 1. Coins are in denomination of 25, 10 and 5 halala.
Banking in Saudi Arabia
As of 2000, Saudi Arabia has allowed foreign banks to operate within its borders, and expats can thus expect a healthy choice in the banking sector for both personal and business banking options. Banking facilities are very advanced, with Internet and mobile phone banking standard.
Banking hours are usually Sunday to Thursday, 8pm to 12pm and 5pm to 8pm, and on Fridays from 8am to 12pm.
Opening a bank account in Saudi Arabia
It is possible for expats to open a bank account in Saudi Arabia. To do this they need a letter of introduction from their employer and their identification in the form of their Iqama. It is worth opening an account as transferring funds to and from overseas can be expensive and unnecessarily tedious.
Due to Islamic law, banks do not pay interest on bank balances, do not allow lending at high interest rates and do not permit account holders to go into debt. Thus, while expat salaries will be fully secure in local banks, if expats want to earn interest on their income it is best to transfer their earnings to an offshore account. However, there is frequent talk that Saudi authorities want to place restrictions or taxes on foreign remittances, although nothing has been finalised as of 2013.
Under Sharia law, non-payment of debt is a criminal offence that can get expats imprisoned. Even worse, the sentence does not discharge the debt. This is the reason for the spate of abandoned cars at Riyadh International Airport – expats unable to pay off luxury car debts have simply left their vehicle at the airport and fled the country.
ATMs and credit cards in Saudi Arabia
Major credit cards such as Visa, MasterCard and Diners Club are widely accepted at shops, hotels and restaurants throughout the country. Traveller’s cheques may present a few problems; currencies recommended for this medium are the Saudi Riyal, Euro, US Dollar and British Pound. It is also recommended to carry the purchase receipt.
ATMs are freely available in Saudi Arabia; some even permit foreign remittances. Cash is still used for most transactions.
Taxes in Saudi Arabia
Foreign employees are not taxed on their salaries – the single biggest advantage to working in Saudi Arabia. There is a religious wealth tax (known as zakat) which businesses must pay, but expat businesses are exempt. There is no sales tax on goods or services either.
To incentivise foreign business investment, tax holidays of up to five years are available, depending on certain criteria.