Tax
Saudi Arabia has no personal income tax on employment income. Businesses pay 20% income tax on profits attributable to non-Saudi, non-GCC ownership, and 2.5% zakat on the Saudi or GCC-owned share.
GOSI social insurance
Contributions are calculated on basic salary + housing allowance, up to SAR 45,000 a month. Since the new Social Insurance Law of 3 July 2024, two cohorts of Saudis run side by side. Which one applies depends on the date the employee was first registered with GOSI, not on the hire date.
| Employer | Employee | |
|---|---|---|
| Saudi, registered before 3 Jul 2024 | 9% annuities + 0.75% SANED + 2% hazards = 11.75% | 9% + 0.75% = 9.75% |
| Saudi, first registered from 3 Jul 2024 (Jul 2026 – Jun 2027) | 10% + 0.75% + 2% = 12.75% | 10% + 0.75% = 10.75% |
| Non-Saudi | 2% occupational hazards | – |
For new entrants, the annuity rate rises by 0.5 points on each side every July: 9.5% in 2025, 10% in 2026, 10.5% in 2027 and 11% from July 2028. GCC nationals are covered under their home-country rates through GOSI. Use the GOSI calculator.
End-of-service award (EOSB)
Under Articles 84–88 of the Labour Law:
- half a month’s wage for each of the first five years;
- one month’s wage for each year after that;
- part years pro rata, with no statutory cap.
Resignation (Art. 85): no award under 2 years’ service, one third for 2–5 years, two thirds for 5–10 years, and the full award after 10 years. Art. 87: the full award also applies in cases of force majeure, and to a woman who leaves within 6 months of marriage or 3 months of childbirth.
The award is based on the last actual wage, which generally includes fixed allowances. It is payable within one week if the employer ends the contract, or two weeks if the employee does. Try the end of service calculator.
Mudad and wage protection
Saudi Arabia’s Wage Protection System runs through Mudad. Employers upload payroll files each month, and they are cross-checked against GOSI records. Mudad flags late salaries, implausible basic wages, deductions above 50% of wage, and basic wages left unrecorded for 90 days or more. Repeated violations lead to warnings, inspection and suspension of ministry services. See the Mudad guide.
Working time and leave (2025 amendments)
- Hours: 8 a day, 48 a week. In Ramadan, 6 a day and 36 a week for Muslim workers.
- Overtime: hourly wage plus 50% of the basic hourly wage (Art. 107). Time off in lieu is allowed with the worker’s consent since 2025.
- Annual leave: 21 days, rising to 30 after five consecutive years with the same employer.
- Maternity leave: 12 weeks fully paid since 18 February 2025. Paternity leave is 3 days.
- Probation: up to 180 days if written into the contract.
- Public holidays: about 10 days, covering Eid al-Fitr, Eid al-Adha, Founding Day (22 Feb) and National Day (23 Sep).
Saudization (Nitaqat)
There is no general minimum wage. Saudis generally need to earn about SAR 4,000 a month to count fully toward the employer’s Nitaqat band, which determines access to visas and government services. Profession-specific Saudization ratios have been added for engineering, accounting, sales and health roles. See the Saudization guide.
Gotchas for foreign employers
- Flag every Saudi employee’s GOSI cohort; legacy and new-entrant rates differ.
- Moving pay out of basic and housing lowers GOSI but raises EOSB exposure, and can draw scrutiny.
- EOSB has no cap, and the resignation fractions are a frequent source of disputes.
- An Employer of Record’s Saudis count toward the EOR’s Nitaqat band, not yours. See EOR vs entity.