Banking, Money and Taxes in Saudi Arabia
The oil rich Kingdom of Saudi Arabia has always been one of the most economically sound nations in the Middle East, and even now continues to show increases in employment opportunity and production despite instances of surrounding recession. It follows that Saudi Arabia has been able to cultivate a relatively robust banking system that 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 nation.
Banking basics in Saudi Arabia
To open a bank account in Saudi Arabia you will need a letter of introduction from your employer and your identification in the form of your iqama. It is worth opening an account as transferring funds to and from overseas can be expensive and unnecessarily tedious.
As of 2000, Saudi Arabia has allowed foreign banks to operate within its borders, thus expats can 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. ATMs are freely available, some even permit foreign remittances. Cash is still used for most transactions also credit cards are widely accepted.
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 you wish to earn interest on your income it is best to transfer your earnings to an offshore account.
Under sharia law, non-payment of debt is a criminal offence that can get you 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.
Banking Hours
Saturday –Wednesday
0800 AM -1200 PM and 1700 PM – 2000 PM
Thursday
0800 AM -1200 PM
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.
Though Saudi Arabia has a healthy basic banking sector, it does not invest a good deal of time in investment or intermediary banks – thus expat investment is not actively encouraged. This recommendation is due largely to the fact that Islamic law does not consider elements of these institutions important and thus many locals turn to their own families and friends for capital – a factor that limits economic growth and development in this financial area.
The Riyal (SAR), divided into 100 halala, is the Saudi currency. Notes are in denominations of SAR 500, 100, 50, 10, 5 and 1. Coins are in denomination of 5, 25, 10 and 5 halala.
Major credit cards such as Visa, Mastercard and Diners Club are widely accepted at shops, hotels and restaurants throughout the country while ATMs are common. You should also have few problems using traveller’s cheques – though currencies recommended for this medium are the Saudi Riyal, Euro, US Dollar and British Pound. It is also recommended to carry the purchase receipt.
0800 AM -1200 PM and 1700 PM – 2000 PM
Thursday
0800 AM -1200 PM
Taxation
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.
Money and investment
Though Saudi Arabia has a healthy basic banking sector, it does not invest a good deal of time in investment or intermediary banks – thus expat investment is not actively encouraged. This recommendation is due largely to the fact that Islamic law does not consider elements of these institutions important and thus many locals turn to their own families and friends for capital – a factor that limits economic growth and development in this financial area.
Currency
The Riyal (SAR), divided into 100 halala, is the Saudi currency. Notes are in denominations of SAR 500, 100, 50, 10, 5 and 1. Coins are in denomination of 5, 25, 10 and 5 halala.
Major credit cards such as Visa, Mastercard and Diners Club are widely accepted at shops, hotels and restaurants throughout the country while ATMs are common. You should also have few problems using traveller’s cheques – though currencies recommended for this medium are the Saudi Riyal, Euro, US Dollar and British Pound. It is also recommended to carry the purchase receipt.
