by Expatguru - 05/26/2014
"This article gives guidance for potential expats planning to work in Saudi Arabia on the various remittance channels and highlights precautions to be taken"
Saudi Arabia, like most other countries in the GCC, does not levy any income tax. Each year, millions of dollars are remitted by expatriates back home. There are plenty of channels through which money is repatriated, so let’s take a look at some of them.
Irrespective of the mode of remittance, there is one common requirement. Expats must register their resident permits (Iqama) as well as details of their beneficiaries. This is the first step to legally transfer funds out of the kingdom. This is to ensure that money which goes out of the country is legitimate, as mandated by the Saudi Monetary Agency (SMA). For registering your Iqama, you need to take a photocopy of the same as well as your passport and get both of them stamped and signed by your sponsor. These must then be submitted to the bank or exchange which is going to transfer your funds.
Simply submitting your papers is alone not enough. This is a continuous process and you must submit updated copies of your Iqama as and when it gets renewed. Failure to do so will result in automatic blocking of your account in the system beyond its expiry date.
There are plenty of banks in the kingdom through which money can be transferred back home, but they are not necessarily the only modes of remittance. Almost every street has a money changer, (also known as “Exchange”) where you can buy, sell and remit currency. Of course, each transaction needs to be authenticated by submitting your Iqama copy unless already registered.
There is no uniform exchange rate available. For instance, two branches of the same institution in the same street could have different exchange rates, with each one operating independent of the other. The rate keeps changing every minute and seasoned expats know those outlets which are cheap and reliable. Note that an inexpensive exchange rate does not necessarily mean that it is really “cheap” because the commission charged on each transaction may be high, which could actually put a hole in your pocket. Sometimes, when the amount you send is more, you could bargain with the bank manager to give you a better rate. Managers have the discretion to give you a slightly favorable rate, to retain customer loyalty.
Money can be transferred either electronically or through “Demand Drafts” (something similar to checks). Demand Drafts are cheaper but come in handy for encashment in places where there are no correspondent banks available. Exchanges are a cheaper option as compared to banks as the commission they take is lesser, but you must exercise caution. Not all exchanges are efficient. Sometimes it might take days for your money to reach your destination (particularly applicable for smaller towns) even when sent electronically, due to various reasons.
Finally, the best way to decide on a particular mode or channel of remittance is by simply asking fellow expatriates – after all it is your own money and you decide how it goes back home!