(Bloomberg) -- Saudi Arabia will waive the controversial fees it requires industrial companies to pay for their foreign workers for a period of five years, lightening a burden on the private sector.
Since January 2018, businesses have been required to pay fees for foreign workers they employ, part of the government’s strategy to raise non-oil revenue and encourage companies to hire Saudis. Many businesses, accustomed to cheaper foreign labor, have struggled to adapt to the fees, which were imposed at the same time as subsidy cuts and a value-added tax.
The levies contributed to an exodus of foreign laborers, hitting the economy without making much of a dent in Saudi unemployment.
In February, King Salman approved a $3.1 billion plan to ease the levies and help revive economic growth, but some businesses said the measures didn’t go far enough.
The cabinet on Tuesday announced that the state will temporarily cover the cost of the fees for licensed industrial companies, according to the official Saudi Press Agency. The cabinet statement didn’t provide further details.
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There are two types of fees on foreign workers in the kingdom. The change on Tuesday applies to those paid by businesses, not to fees that foreign residents must pay on behalf of their dependents.