Saudi Arabia: Insurance Unveils Details of New Retirement System

Ean Libya, 14 October 2024: The Saudi General Organisation for Social Insurance announced the details of the new retirement system and the minimum age for early retirement.

The organisation has stated that the minimum age for early retirement for subscribers to the new system is 55 years old.

The organisation has announced that one of the conditions for obtaining a retirement pension is having 30 years of service for the retiree, with their cessation of work subject to the provisions of the system when they wish to receive the retirement pension.

It has been explained that the retirement age in the new system is 65 years old, but retirement can be taken ten years before this age.

It has been pointed out that the minimum retirement pension will be 4,000 riyals for those whose subscription period is 40 years.

If the subscription period is less than that, this minimum will be reduced for each 12 months of subscription and each month proportionately, provided that it does not fall below 2,000 riyals.

Regarding the mechanism for calculating the retirement pension, the Saudi General Organisation for Social Insurance has explained that the average wage or salary will be calculated based on the highest wages or salaries subject to subscription for 180 months of the subscription periods in the new system.

Then, the average wage is multiplied by 2.25%, and the result is multiplied by the number of subscription months, then divided by twelve.

In the case of early retirement, the subscriber will be deducted 3% for each year that their subscription period falls short of 40 years.

The Saudi General Organisation for Social Insurance has also pointed out an increase in the subscription deduction rate by 0.5% for each year during the next four years, raising the deduction rate from the employee’s salary from 9% to 11%, in addition to a ‘sand’ deduction of 0.75%, bringing the total deduction from the employee’s salary to 11.75% monthly.

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Saudi Arabia: Labour Dispute Resolution Decree Extended

Sada, 8 October 2024: The Saudi government has decided to prolong the implementation of the decree on amicable settlement of labour disputes for an additional year.

This legal measure aims to facilitate the resolution of employment-related conflicts through conciliation before escalating to court proceedings.

The Council of Ministers’ decision extends the application of the relevant provision in the Royal Decree, which mandates that labour disputes must first be submitted to the labour office for attempted amicable settlement prior to filing a case with the labour court.

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Saudi Arabia: Financial Support for Persons with Disabilities Regulated

Al Yaum, 29 September 2024: The Human Resources and Social Development Ministry has amended the regulatory framework governing social and professional programmes for persons with disabilities.

The new regulations standardise terminology and align the definition of a person with a disability with Saudi Arabia Administrative Decision No. 26/1445 of Rights of Persons with Disabilities.

The legislation mandates the Ministry’s oversight of services provided to persons with disabilities by private and non-profit entities.

It also establishes eligibility criteria for financial assistance, capped at 20,000 riyals annually, based on the assessment and severity of the disability.

Additionally, it introduces initiatives aimed at enhancing the skills of persons with disabilities.

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Saudi Arabia: Certain Real Estate Transactions Exempted from VAT

Al-Riyadh, 19 September 2024: The Saudi Council of Ministers, during its session held on 17 September 2024, chaired by the Crown Prince and Prime Minister, has approved the Real Estate Transactions Tax System.

The law imposes a rate of 5% on the total value of real estate transactions involving the transfer of property ownership, such as sales, exchanges, or similar transactions.

However, certain transactions are exempted according to the executive regulations, including the distribution of inheritance among beneficiaries, the disposal of property for family or charitable endowments, and the transfer of ownership to licensed charitable associations.

The real estate transaction tax was introduced at the beginning of the year 1442 AH, replacing the 15% VAT on real estate sales.

Additionally, the state’s support for the tax on the first home for citizens increased from 850,000 riyals to one million riyals.

Recent amendments to the executive regulations require all real estate transactions to be registered on the Zakat, Tax and Customs Authority’s real estate transaction portal, with details on the property and the type of transaction specified before documentation with the competent authorities.

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Saudi Arabia: Launches Tourist Tax Refund Scheme

Gulf Insider, 11 September 2024: Saudi Arabia has launched a tourist tax refund scheme to attract more visitors and enhance its competitiveness with neighbouring Gulf countries.

In late August, the Zakat, Customs, and Tax Authority initiated a public consultation on proposed changes to tax regulations.

These changes are designed to improve compliance with value-added tax (VAT) laws and provide relief to certain VAT payers.

While Saudi Arabia does not levy personal income tax, excise duties were introduced in 2017, and VAT was increased to 15% in 2020 from 5% when it was first implemented in 2018.

The new tourist refund follows the recent suspension of licensing fees for hotels, hotel apartments, and resorts, part of the government’s strategy to increase tourism’s contribution to gross domestic product (GDP) to 10% by 2030.

This will place Saudi Arabia as a global touristic destination.

Saudi Arabia aims to attract 50 million religious tourists annually by 2030.

Additionally, Saudi Arabia plans to simplify foreign investor registration starting in January to boost its foreign direct investment figures.

The Capital Markets Authority is considering eliminating the 5% withholding tax on interest payments to corporate bondholders.

Currently, non-GCC investors in Saudi Arabia face a 20% corporate income tax, which can rise to at least 50% for oil and hydrocarbon producers.

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Saudi Arabia: Waives Fees for Exports

Khaleej Times, 8 September 2024: The Saudi Arabia’s Zakat, Tax and Customs Authority (ZATCA) has announced new customs service fees starting 6 October 2024.

The new rules include waiving the fees for all customs services for exports.

The authority has also reduced customs service fees for imports through a new mechanism for calculating import service fees, which involves a fee of 0.15% of the value of the incoming goods for customs declaration processing services.

Additionally, the Fee Document on Customs Services stipulates a fee of SAR15 for customs declaration processing services on individuals’ shipments arriving through online stores, provided that the value of these shipments does not exceed SAR1,000.

The ZATCA has clarified that the customs services for exports for which the fees have been waived include customs declaration processing service, lead seal, land port loading services, X-ray inspection, customs data exchange, and sample analysis exchange at specialised laboratories.

The authority has added that previously the customs service fees for imports included a charge of SR100 for each container inspected by X-ray, an additional SR 100 for “information exchange” services, and SR20 for customs declaration processing services.

With the new decision, the fee shall be based on 0.15% of the value of the incoming goods, including insurance and shipping, with a maximum of SR 500 and a minimum of SR15 and a special cap of SR130 for shipments exempt from customs duties and taxes.

ZATCA invites customers and taxpayers to contact it if they have any inquiries via the unified 24/7 call centre number (19993), its X Account (@Zatca_Care), e-mail (info@zatca.gov.sa), or instant chatting through its website (zatca.gov.sa).

The new mechanism for calculating import service fees aims to reduce import costs and enhance the importers’ capability to pre-calculate customs service fees for imports and set a higher limit for such fees.

The new decision also ensures the elimination of any cost increases against importers and unifies the calculation mechanism for the various land, sea and air ports while supporting and enhancing trade facilitation objectives.

ZATCA has also announced that through the new measures, it seeks to provide customs services in accordance with the best practices, leading to realising positive income across the logistics ecosystem and supporting its strategic objectives.

The new measures also aim to promote the confidence of importers and exporters and improve transparency.

ZATCA has reiterated its commitment to develop its customs services in line with its strategic objectives by contributing to turning Saudi Arabia into a global logistics hub in line with Vision 2030.

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Saudi Arabia: Second Issue of Open Banking Framework Issued

Mubasher, 3 September 2024: The Saudi Central Bank (SAMA) has announced the issuance of the second version of the Open Banking Framework, focusing on the payment creation service.

This initiative aims to improve the financial technology ecosystem in the Kingdom, improve customer experience, increase transaction efficiency, and provide new opportunities in the sector by offering expanded products and solutions to customers.

The Open Banking Framework includes a set of technical instructions and standards aligned with international best practices, enabling banks and fintech companies to provide open banking services in the Kingdom.

This version will allow these entities to offer the payment creation service in a reliable and secure manner, clarifying the responsibilities, obligations, and requirements related to providing the service.

The payment creation service empowers individual and institutional customers of fintech companies to create payment transactions directly from their bank accounts to the beneficiaries’ accounts securely.

This development is part of SAMA’s efforts to foster innovation and drive the growth of the financial technology sector in Saudi Arabia.

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Saudi Arabia: Issues Rules For Appointing Personal Data Protection Officers

The Saudi Data & AI Authority (SDAIA) has issued new rules for appointing Personal Data Protection Officers (DPOs).

These rules are in line with Saudi Arabia Royal Decree No. M19/1443 On the Approval of the Personal Data Protection Law and amended pursuant to Saudi Arabia Cabinet Decision No. 604/1444, and Saudi Arabia Administrative Decision No. 1516/1445 on Implementing Regulation of the Personal Data Protection Law.

The rules aim to set minimum requirements for DPO appointments, clarify cases where a DPO must be appointed, and outline the roles and responsibilities of DPOs.

Controllers must appoint a DPO if they are a public entity processing personal data on a large scale, if their core activities involve regular and systematic monitoring of data subjects, or if their core activities involve processing sensitive personal data, as per Article 5 of the rules.

The rules provide criteria for determining what constitutes large-scale processing and regular and systematic monitoring.

The DPO must have appropriate academic qualifications, experience in data protection, knowledge of risk management practices, and regulatory requirements, as stated in Article 4 of the rules.

They can be an employee of the controller or an external contractor.

The appointment must be documented, and the DPO’s contact details must be provided to SDAIA and made accessible to data subjects, as per Articles 6 and 7 of the rules.

The rules outline the DPO’s roles and tasks, including advising on data protection policies, contributing to data breach response plans, preparing reports on the controller’s data processing activities, and following up on regulatory updates from SDAIA, as stated in Article 8 of the rules.

Controllers must enable and support the DPO in performing their duties, provide necessary resources, and ensure the DPO’s independence, as per Article 9 of the rules.

The rules also encourage training and professional development for DPOs.

The new rules aim to enhance personal data protection in Saudi Arabia by ensuring that organisations handling personal data have dedicated personnel responsible for monitoring compliance with Saudi Arabia Royal Decree No. M19/1443 and Saudi Arabia Administrative Decision No. 1516/1445.

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