Our guide to Payroll in Saudi Arabia

Doing Business in Saudi Arabia

Saudi Arabia continues to redefine its economic landscape through its ambitious Vision 2030, aiming to diversify its economy beyond oil and open up new sectors for development.

The nation is characterised by its strategic location, connecting three continents, and its commitment to creating a dynamic business environment. Saudi Arabia has been making significant strides in streamlining business processes, enhancing transparency, and developing state-of-the-art infrastructure.

Key sectors such as tourism, entertainment, renewable energy, and technology are witnessing substantial growth, driven by government initiatives and reforms. The establishment of special economic zones and industrial cities offers attractive incentives for businesses, including tax advantages, customs duty benefits, and streamlined regulations. With a large, young, and tech-savvy population, Saudi Arabia presents a wealth of opportunities for businesses looking to tap into the growing Middle Eastern market.

Investing in Saudi Arabia

Saudi Arabia presents a compelling investment narrative, marked by its vast natural resources, strategic initiatives like Vision 2030, and efforts to liberalise its economy.

The nation's focus on sectors such as renewable energy, tourism, mining, and technology aligns with global investment trends and sustainability goals. The Public Investment Fund (PIF), one of the largest sovereign wealth funds globally, plays a pivotal role in driving economic diversification and attracting foreign investment.

Investors benefit from Saudi Arabia's robust financial markets, regulatory reforms, and efforts to enhance the ease of doing business. The country's megaprojects, including NEOM, Qiddiya, and the Red Sea Project, offer unique opportunities for investment in infrastructure, tourism, entertainment, and green energy. With its commitment to economic reform and strategic geographic position, Saudi Arabia offers a dynamic and promising environment for investors seeking growth, innovation, and market access.

Saudi Arabia in 2026 continues deep economic transformation under Vision 2030, accelerating diversification, digitalization, and market liberalization.

• Non‑oil GDP exceeds 50% of total GDP.
• Foreign investors enjoy 100% ownership across most sectors under the 2026 Investment Law.
• Mega‑projects (NEOM, Red Sea, Qiddiya, New Murabba) drive opportunities in tourism, energy, tech, and construction.

Basic Facts about Saudi Arabia

• Capital: Riyadh

• Population: 21.6 million (2025 est.)

• Currency: Saudi Riyal (SAR)

• Government: Monarchy

• Economic Drivers: oil, logistics, tech, tourism, renewable energy.

How to Say:

Hello: (As-Salām 'Alaykum) مرحب

Good Morning: (Ṣabāḥul KẖAyr) صباح الخير

Good Evening: (Masā' Al-Khayr) مساء الخير

Do You Speak English? (Hal Tatakallam El-Ingliziyya) هل تتكلم الانجليزية

Good Bye: (Bāy Bāy) باي باي, (Ma`A As-Salāma) مع السلامة

Thank You: (Shukran Jazīlan) شكرا جزيل (Shukran) شكرا

See You Soon! (Ashoufak 'Ourayyeb) نراكم قريبا

Public Holiday 2026

Main confirmed holidays:

• Founding Day – Feb 22
• Eid al-Fitr – Mar 20–22 (Moon-based)
• Arafat Day – May 26
• Eid al-Adha – May 27–29
• Saudi National Day – Sep 23

Registrations and Establishing an Entity

Saudi Arabia moved to a digital, registration-led system:

• Investors start with MISA’s Investment Registration Certificate (IRC).
• Commercial Registration (CR) issued through Saudi Business Center (SBC).
• Articles of Association notarized electronically via Ministry of Justice.
• Mandatory integrations: National Address, Qiwa (labor), GOSI (insurance), ZATCA (tax) including e-invoicing Phase 2.

Setting up a Legal Structure

Common structures:

• LLC (most common for foreign investors).
• Branch office (requires MISA approval).
• Joint Stock Company (JSC) for large entities.
• Special Economic Zones (SEZs) offer tax incentives (5% CIT for 20 years).

Banking

Banking sector modernized through fintech laws, digital payments, and regulatory innovation.

E‑invoicing compliance (Fatoora) mandatory for all businesses.

Working Week

• Standard working week: 40 hours (Sunday–Thursday).
• Tight rules for overtime and flexible arrangements under updated labor law.

Employment Law

Holiday Accrual / Calculations

• Minimum 21 days paid annual leave, increasing to 30 days after 5 years.
• Public holidays paid separately (Eid, National Day).

Maternity / Paternal Leave

• Maternity leave: 10 weeks paid, employer + GOSI funded.
• Paternal leave: 3 days paid.

Sickness

Employees entitled to:

• 30 days full pay,
• 60 days ¾ pay,
• then 30 days unpaid, per illness cycle.

National Service

Saudi Arabia does not have compulsory national service.

Labor Law (2026 Updates)

New rules emphasize digitalization and worker protection:

• Digital contracts mandatory via Qiwa; paper contracts invalid.
• Mandatory housing/transport allowances or employer-provided equivalents.
• Probation capped at 180 days; renewal only for new roles.
• Overtime can be paid at 150% or converted to paid leave by agreement.
• Stronger compliance around timely salary payments and protections for foreign workers.

Tax, Employee Provident Fund, Social Security & Human Resource Development

Tax Rates

Saudi Arabia has one of the simplest tax systems globally:

• Personal income tax: 0% (no PIT on employment income).
• Corporate Income Tax (CIT): 20% on profits attributable to foreign ownership.
• Zakat: 2.5% on Saudi/GCC ownership share.
• VAT: 15%.
• Withholding tax: 5–20% depending on service type.

Social Security (GOSI)

• Saudi nationals:
• Employee: 9.75% (pension + SANED).
• Employer: 11.75% (pension + hazard + SANED).
• Expatriates:
• Employer pays 2% occupational hazard only.
• Wage base capped at SAR 45,000/month.

2025 law increases Saudi national contributions gradually until 2028.

Reporting

New Employees:

• Mandatory digital contract registration in Qiwa (2026 rule).
• Register with GOSI.

Leavers:

• Contract termination updated in Qiwa + GOSI within required deadlines.

Payroll

It is legal to provide the employee with an online payslip, there are no procedures regarding the provision of online payslips.

Reports

Monthly: GOSI, wage protection system (WPS), ZATCA VAT returns (if applicable).

Digital invoicing: mandatory Phase 2 e‑invoicing.

New Starts

Employees must be registered as soon as the employment contract has been signed. Expat employees are registered during the visa application process and must also be registered with GOSI. The GOSI registration process is completed through an online GOSI portal and each entity has a unique GOSI number. Saudi employees must be added as part of the onboarding process on the first working day.

Saudi Law states that a probation period should not last any longer than 30 days.

Leavers

All leavers must be deregistered from GOSI through the GOSI online portal. Employees serving their notice periods are entitled to eight fully paid hours per week or a full day per week to look for alternative employment.

If an employer terminates the employee, they must have a valid reason for doing so. Examples of valid reasons include gross misconduct, violence, prolonged absence without reason and employees that are still under probation.

Employee Benefits

Statutory benefits include:

• GOSI cover (Saudis full; expats hazard only).
• Medical insurance (mandatory for all employees under CCHI).
• Paid annual leave, sickness leave, maternity/paternity leave.
• Housing/transport allowances if not provided in-kind.

Vision-2030 reforms emphasize employee welfare and transparent benefit structures.

Visas & Work Permits

Individuals cannot apply for a permit themselves; their sponsor must apply for one on their behalf.

Employment Visas (a.k.a Block Visas) are allocated to a company by the KSA government to enable the company to recruit non-Saudi nationals from outside KSA. The company will be allocated a defined number of visas for each country and labor category. The company must meet industry- and size-specific Saudization requirements in order to qualify for expatriate employment visas. The company will not be able to hire expatriate employees if the established Saudization levels are not met.

The company must have an employment visa for the respective country and labor category available in order for a candidate to qualify for an employment visa. The candidate must also be in possession of the required documents that prove their qualifications required for the respective visa labor category.

In many countries, employment visas can only be processed by authorized recruitment and visa processing agencies. If and when required, the company will refer the employment visa applications to the authorized local agencies for processing. Employees will be notified with the contact information of the authorized agencies. Employees are required to follow the instructions provided by the agencies in a timely manner.

Since 2025, the Ministry uses a Skill‑Based Classification System for work visas, with minimum salary/qualification thresholds.

Eligibility

For a prospective Employee to obtain an Employment Visa, they must have:

• Professional skills or academic qualifications that are lacking or unavailable in Saudi Arabia
• An employment contract with a Saudi citizen, a Saudi company or a foreign organisation licensed to do business in the country

Given that there is currently a drive towards ‘Saudization’ of organisations, Employers have to prove to the Saudi government there are no Saudi citizens available to fill the position in question.

Application Procedure

This process still exists but is now done digitally via:

✔ Qiwa (Ministry of Human Resources)

✔ MOFA (Ministry of Foreign Affairs)

Once the application has been approved, the Employee is required to submit the following documents to the Saudi embassy in the country of residence:

• Original passport: valid for the duration of the employment contract with a minimum of two consecutive blank pages
• Three colour passport photographs
• Completed application form: this will either be provided by the Employer or can be requested from the embassy or consulate of Saudi Arabia in the home
• Copy of the employment contract: signed by both the Employee and the sponsor (Employer)
• Letter from the sponsor (usually the Employer), certified by the Saudi Chamber of Commerce and the Ministry of Foreign Affairs, including the number and date of the visa, as well as the name of the applicant and the job title
• Copy of a degree or diploma received by the foreign Employee, certified and notarised by the relevant organisation in the home country as well as the embassy or consulate of Saudi Arabia in that country
• Three copies of a medical report (with three passport photographs) certifying the absence of the HIV virus and any contagious diseases: this must be issued by a licensed doctor from a Saudi Embassy-approved clinic in the country of origin within three months of the application. All individual copies need the doctor’s signature along with details of name, address and licence number (where applicable), and may need to be paid for by the Employee
• Police report detailing any criminal records held by the applicant, which must be issued within six months of the application
• Notification of the number of the Employment Visa applied for by the sponsor from the Ministry of Foreign Affairs in Saudi Arabia and its date of issue
• Application fee: this should be paid by the Employer, but if it is required to arrange this personally, check how it should be made in the country of origin with the Employer.

These documents can be directly submitted to the Saudi embassy, but it is often faster, to go through an agency nominated by the Employer to handle the application.

The below table summarizes the various immigration alternatives that are available for the employees, contractors and visitors of a company:

¹ Ability to sponsor family for an Iqama depends on the employee’s labor category.

Minimum Wage 2026

There is no universal minimum wage.

• Saudi nationals: SAR 4,000/month for Nitaqat compliance.
• Foreign workers: No official minimum; typical range SAR 1,500–3,000 for low-skilled roles.