SAUDI ARABIA PEO & EOR
Hire in Saudi Arabia without a local entity today
DID YOU KNOW
- The religion of Islam originated in Saudi Arabia, and its holiest shrines (Mecca and Medina) can be found there.
- Saudi Arabia has long been a frontrunner in innovation and technology, and the first part of its megacity ‘Neom’ is due to be completed by 2025.
- Immigrants make up around 30% of the Saudi population, with many foreign workers coming from Africa and Southeast Asia.
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Saudi Arabia PEO Services
The largest economy in the Arab World and Middle East
Saudi Arabia’s economy is the largest economy in the Arab World and the Middle East, and one of the top 20 in the world. As a global oil exporter, Saudi Arabia’s economic infrastructure is well developed for international trade. In Saudi Arabia, business is conducted in Arabic and English, and English is a required second language in schools.
Saudi Arabia is the 36th most competitive nation globally out of 140 nations, ranked by the 2019 edition of the Global Competitiveness Report by the World Economic Forum. The country also tops the G20 countries in the Digital Competitiveness 2021 Report. In addition to its economic stability, Saudi Arabia also ranks 15th in terms of the soundness of its banks.
Working in Saudi Arabia
Employment Information
The Kingdom invests internally to create a business-friendly environment. Saudi Vision 2030, unveiled in 2016, focuses on developing Saudi Arabia’s health, education, infrastructure, and tourism sectors. In Saudi Vision 2030, the country aims to increase global investments and become an international hub for Afro-Eurasia.
The Kingdom has seen a change in the national business model as the country emphasized privatization, making it an excellent place to expand and grow business rapidly. Additionally, international investors can be exempted from substantial income tax or even a lot of sales tax. This tax rebate attracts many international investors since they would like to pay as little tax as possible.
Recently, Saudi Arabia has experienced a lot of political and cultural reforms, especially for Saudi women. Foreign investors can now ease up on some age-old customs and traditions that held them back in the past.
Saudi Arabia’s openness toward cosmopolitan investors also promotes economic growth in the region and attracts more foreign investment. Riyadh is considered one of the safest cities globally because the level of violence is considerably lower than that of some of the major cities in the United States or Europe. The country is also a hub for modern health care and education sectors. The Saudi people are warm and hospitable, while at the same time supportive and willing to help others.
Financial Year Dates
1st January – 31st December
Minimum Wage
As of 2024 in the private sector, the minimum wage is 4,000 Saudi Riyals. This only applies to Saudi nationals.
Standard working hours
The standard daily working hours in Saudi is limited to 8 hours (48 hours over the working week with a reduction in hours during the month of Ramadan, where daily working hours are reduced to 6 (36 hours over the working week). This applies to practicing Muslims.
Overtime
Any hours worked past the standard daily 8 hours is considered overtime. Any overtime worked is paid at least 150% times the employee’s normal hourly rate.
Holiday Allowance
Annual leave varies from 21 – 30 days depending on the employee’s length of service. Employees who have worked less than 5 years in the company are entitled to 21 days annually. Over 5 years employment enhances annual leave to 30 days.
Sick Leave
Employees are entitled to 30 days’ of full pay sick leave a year, plus an additional 60 days paid at 75%, with a further 30 days unpaid sick leave a year. This applies if the sickness is for one continuous leave or several intermittent absences throughout a year. A domestic employee is entitled to 30 days of sick leave provided medical evidence can be produced.
Maternity & Paternity Leave
Maternity leave grants the employee 10 weeks’ paid leave. 3 weeks’ leave must be taken prior to the birth date, and the employee must not return until at least 6 weeks have passed following the birth. A further 2 months’ leave can be taken, however this is unpaid. There are some exceptions that would grant a further 1 month’s paid maternity leave, where the child is born with certain health conditions. Paternity leave grants fathers 3 days of paid leave.
Public Holiday
Employees are entitled to the following paid public holidays annually: -Saudi Founding Day -Saudi Flag Day -Eid Al-Fitr (lasts 10 days, but most employers observe only 3 days) -Saudi National Day -Eid Al-Adha (lasts 10 days, but most employers observe only 5 days)
Social Contributions
Social contributions in Saudi are paid to the General Organization for Social Insurance (GOSI). Contributions are calculated based on the employee’s basic salary, housing allowance and commissions, with a cap of SAR 45,000 per month. Employer rates for Saudi Nationals is 11.75% which includes 9% social insurance, 2% occupational hazard, and 0.75% SANED unemployment insurance. For expatriate employees, the employer pays 2% occupational hazard insurance. In Saudi Arabia, employee salary deductions include social insurance contributions and Zakat. GOSI, are mandatory for all Saudi employees and GCC nationals working in Saudi Arabia. The contribution is 9.75% of the employee’s gross salary, which is made up of 9% social insurance and 0.75% SANED unemployment insurance. Zakat is an obligatory religious tax for Muslims. The Zakat is calculated on wealth exceeding a certain threshold known as the nisab. Muslim employees with wealth exceeding the nisab are required to pay. Zakat is generally calculated at 2.5% of eligible wealth held over a lunar year.
Income Tax
Saudi Arabia has a unique tax system. There is no personal income tax, however there are several taxes that may be applied depending on circumstances. These include: business taxes, withholding taxes, Real estate transaction tax, white land tax, social security contributions and Zakat. Tax obligations apply dependent on if you qualify as a resident of Saudi Arabia. Any non-residents earning money or carrying out business in Saudi Arabia is charged withholding tax.
Health Care
Saudi Arabia has a mixed public and private healthcare system, both providing good quality services. Furthermore, around 60% of services are publicly provided through the government’s Ministry of Health. These consist of: Primary healthcare centres Hospitals Specialist services Outpatient services Since 2005, non-nationals must have mandatory health insurance, and this should be provided through employers.
Visas
To work in Saudi Arabia, you need an Iqama residence permit, issued by the Ministry of Interior. The Iqama acts as official identification and allows the holder access to essential services and rights. Employers must apply and sponsor the Iqama for expatriates. Once the partner has sponsorship, they will be able to payroll the employee. The permit allows foreigners to live and work and last for a year. The visa can be renewed at a cost annually. The total timeframe for the Iqama is 1-3 months. The major contribution to the timeline is dependent on where the applicant needs to get their visa attested in, as some countries take a lot longer than others. It is a straightforward process to transfer the Iqama visa over to a new sponsorship.
A Saudi Arabia PEO/EOR provider can also provide guidance on this process. A PEO/EOR can provide a payroll solution in Saudi Arabia, so that workers can easily set up in Saudi Arabia and businesses can easily place workers in-country.
Saudization
Saudization, also known as Nitaqat, is an incentive applied by the Ministry of Labour making it mandatory for companies to hire Saudi nationals. Saudi Arabia has previously heavily relied on the aid of foreign workers to fulfill its workforce. For companies with up to 5 employees, one must be a Saudi national. Companies with over 100 employees must have at least 30% Saudi national employees. However, this can vary depending on the sector and license rate.
Companies are issued Saudization/ Nitaqat certificate, which is an official document issued by the Saudi Arabian government to companies that demonstrate compliance with Saudization policies and meet the required Saudization percentage within their workforce. The certificate is categorised into different colour zones, indicating the levels of compliance achieved.
- Red Zone: Companies with a Saudization percentage ranging from 0% to 16.21%
- Low Green Zone: Companies with a Saudization percentage ranging from 16.22% to 19.25%
- Medium Green Zone: Companies with a Saudization percentage ranging from 19.26% to 23.11%
- High Green Zone: Companies with a Saudization percentage ranging from 23.12% up to 26.51%
- Platinum Zone: Companies with a Saudization percentage ranging from 26.52% up to 100%
Cultural Information
- In Saudi Arabia, formal dress code is the norm for meetings. Casual language, mannerisms and attitudes should be avoided. When communicating with Saudi Arabian business colleagues, use their full titles. In Saudi Arabia, formality and respect is valued.
- When interacting with Saudi colleagues, it is also essential that you pay attention to their hierarchy. Top executives have decision-making authority, so they should always be addressed accordingly.
- Work typically begins on Sunday and ends on Thursday. Unlike in Western countries, Saudi Arabia designates Fridays and Saturdays as days of rest.
- Saudi Arabian colleagues are likely to set up a series of meetings to get to know you before closing a deal. Business in Saudi Arabia is relationship-driven and takes time to establish.
- Personal conversation and prayer breaks during meetings are common occurrence in Saudi Arabia. Business agendas are flexible in Saudi Arabia.
- All foreign expats and visitors must be aware that the sale, consumption and manufacturing of alcohol is strictly prohibited in Saudi Arabia.
Impacts from COVID-19
As is common in other countries across the world, the COVID-19 pandemic accelerated remote working practices in Saudi Arabia. Remote working and flexible working patterns have continued to be prevalent in a number of sectors in the country.