Civilisation in the territory now known as Saudi Arabia dates back over 100,000 years, and was characteristically tribal and nomadic until Islamic society began to coalesce in the 6th and 7th centuries AD.

Subsequently ruled by a variety of Arab dynasties and political powers until the 20th century, the Kingdom of Saudi Arabia was founded in 1932 by Ibn Saud, who united the four regions of Hejaz, Najd, Eastern Arabia, and Southern Arabia.

The discovery of oil and gas deposits within the kingdom propelled it onto the world stage, and quickly made it a significant international commercial interest.

Today, Saudi Arabia remains a hereditary monarchy, with an economy based on its lucrative oil production industry.

As the location of Mecca, Saudi Arabia holds a central place in Arab and Islamic culture, and is otherwise a country of predominantly desert landscapes, surrounding settlements and highly populous urban centres.

Saudi Arabia holds a variety of desert animals, including gazelles, leopards, and hyenas, while its climate is hot and dry throughout most of the year, with an annual monsoon season between October and March.

General Information

• Official Name: Kingdom of Saudi Arabia
• Capital: Riyadh
• Population: 36.4 million (World Bank, 2022)
• Area: 2,149,690 Sq. Km (424 Sq. Miles)
• Major Languages: Arabic
• Major Religions: Islam
• Monetary Unit: Saudi Riyal (SR)
• GNI Per Capita: $27,590 (World Bank, 2022)
• Main Exports: Petroleum and petroleum products
• Internet Domain: .sa
• International Dialling Code: +966

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 )

Dates and Numbers in Saudi Arabia

Dates are usually written in the day, month and year sequence, for example, 12 July 2024 or 12/07/2024.

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 known 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.

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.

In 2024, Saudi Arabia is strategically positioned as a prime destination for foreign direct investment (FDI), with its Vision 2030 blueprint guiding its economic transformation. The nation's FDI strategy focuses on leveraging its competitive advantages and fostering partnerships with global investors. Key areas for FDI include:

• Renewable Energy and Sustainability: Saudi Arabia is investing heavily in renewable energy projects, particularly solar and wind, to diversify its energy sources and promote sustainable development.
• Tourism and Hospitality: With its rich cultural heritage, religious significance, and ambitious tourism projects, Saudi Arabia offers vast opportunities for investment in hospitality, leisure, and cultural experiences.
• Technology and Innovation: The nation's focus on digital transformation and building a knowledge-based economy presents FDI opportunities in technology, research and development, and startups.
• Industrial and Manufacturing: Saudi Arabia aims to develop its industrial sector, offering opportunities in petrochemicals, mining, pharmaceuticals, and automotive industries.

Saudi Arabia's comprehensive reforms, strategic economic initiatives, and efforts to create a business-friendly environment are driving its appeal as a destination for FDI. The establishment of special economic zones, regulatory enhancements, and a focus on public-private partnerships further reinforce its attractiveness to foreign investors. For businesses looking to explore the opportunities in Saudi Arabia, the combination of traditional market strengths, emerging sectors, and transformative projects makes it an ideal choice. Engaging with local experts, investment promotion agencies, or consulting firms can provide deeper insights and support a successful entry into the Saudi market.

It is mandatory to have an in-country bank account to process payments in Saudi Arabia. All government levies must be paid through a government payment channel, SADAD. SADAD payments can only be initiated from Saudi Arabia-based bank accounts. For more information on SADAD, visit the SADAD website.

All entities with more than 10 employees are required to process their payroll payments through the Wage Protection System (WPS). The WPS is designed to ensure timely and accurate payment of wages to employees. You can find more details about WPS on the Ministry of Human Resources and Social Development.

Bank lending in Saudi Arabia consists mainly of trade and medium-term investment finance. Banking operations in the Kingdom are regulated by the Saudi Arabian Banking Control Law and are supervised by the Saudi Arabian Monetary Agency (SAMA). For more information on banking regulations and oversight, visit the SAMA website.

The formation and operations of business entities in Saudi Arabia are governed by the Companies Law, first promulgated by a Royal Decree in 1965 and subsequently amended in 1967 and 1982. These provisions are comprehensive, covering all types of commercial activities within the Kingdom.

Types of Business Entities in Saudi Arabia

When setting up a business in Saudi Arabia, foreign investors can choose from several types of entities, each suited to different business needs and objectives. Here are the main types:

Limited Liability Company (LLC):

The LLC is the most common business structure for foreign investors in Saudi Arabia. It requires a minimum of two shareholders and can have up to 50 shareholders. While there is no minimum capital requirement, the capital must be sufficient to meet the company's objectives. Shareholders' liability is limited to their share capital, making it an attractive option for many businesses.

Joint Stock Company (JSC):

Ideal for larger ventures, the JSC can be either public or private. It requires a minimum share capital of SAR 500,000 for private JSCs and SAR 10 million for public JSCs. This structure allows for significant capital investment, with shareholders' liability limited to the value of their shares. Public JSCs can offer shares to the public, enhancing their ability to raise funds.

Branch of a Foreign Company

This entity type allows foreign companies to operate directly in Saudi Arabia without creating a separate legal entity. There are no specific capital requirements for branches, and the parent company is fully liable for the branch's activities. This structure is suitable for businesses that want to maintain a close connection with their foreign headquarters.

Representative Office

A representative office in Saudi Arabia can only engage in promotional and market research activities, not direct commercial activities. There are no capital requirements for establishing a representative office. This type of entity is ideal for companies looking to explore the Saudi market and build business relationships without engaging in actual sales or production activities.

Formation and Operations of Business Entities in Saudi Arabia

The formation and operations of business entities in Saudi Arabia are governed by the Companies Law, first promulgated by a Royal Decree in 1965 and subsequently amended in 1967 and 1982. These provisions are comprehensive, covering all types of commercial activities within the Kingdom.

1. Prepare documents including legalisation by the Saudi Consulate.
2. Submit application to the Saudi Arabian General Investment Authority (SAGIA) and obtain an investment license.
3. Obtain agreement from the Companies Department at the Ministry of Commerce and Industry after submitting the Articles of Association and the company name.
4. Sign the Articles of Association in front of a Notary Public.
5. Publication of the company name and a summary of the Articles of Association in the official gazette. This will cost approximately 5500SR.
6. Open a Bank Account, Transfer the Share Capital and Obtain a Certificate stating that the capital has been deposited.
7. Register with the General Department of Passports, Ministry of Interior and the Ministry of Labor and obtain a work visa for the company manager.
8. Company manager getting his visa stamped at the Saudi consulate and obtaining his Work Permit and Residence Permit upon arrival in Saudi Arabia.
9. Registrations with the Commercial Registry at the Ministry of Commerce and Industry and the Chamber of Commerce. This costs 8100 SR approximately.
10. Obtain a File Number and Certificate of Business commencement by registering with the Department of Zakat and Income Tax (DZIT), Ministry of Finance.
11. Register with the General Organisation of Social Insurance.

Setting up a business in Saudi Arabia involves navigating through a series of regulatory steps designed to ensure compliance with local laws. For further assistance, consider consulting with global mobility, employment law and tax solution provider like activpayroll experts to streamline the process and ensure compliance with all regulatory requirements.

Sponsorship in Saudi Arabia

The employer, known as the sponsor, is responsible for recruiting the employee and maintaining their sponsorship status. Employees have the option to transfer their sponsorship to another employer or sponsor, provided they adhere to the regulatory rules set by the Kingdom.

Individuals cannot apply for a permit on their own; the application must be submitted by their sponsor on their behalf. This ensures that the employer handles all necessary legal and administrative procedures related to the employee's work permit and residency status.

Employment Visas (Block Visas) in Saudi Arabia 

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 labour 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 labour 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 labour category.

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

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.

Employment for women is restricted to a limited number of professions – mainly in the education, healthcare and domestic help sectors.

Application Procedure for Employee Sponsorship in Saudi Arabia

To begin the process, the sponsor (employer) will first open an "immigration file" at the Ministry of Interior and apply for a visa. Once the application is approved, the employee must submit the following documents to the Saudi embassy or consulate in their country of residence:

• Original passport: Must be valid for the duration of the employment contract with at least two consecutive blank pages.
• Three color passport photographs: Recent photographs required for the application.
• Completed application form: Provided by the employer or available from the Saudi embassy or consulate.
• Copy of employment contract: Signed by both the employee and the sponsor. This contract must be attested by the Chamber of Commerce and the Ministry of Foreign Affairs.
• Letter from the sponsor: Certified by the Saudi Chamber of Commerce and the Ministry of Foreign Affairs, including the visa number, date of issue, the applicant’s name, and job title.
• Educational qualifications: Copy of the employee’s degree or diploma, certified and notarised by the relevant organisation in the home country as well as the Saudi embassy or consulate.
• Medical report: Three copies certifying the absence of HIV and any contagious diseases, issued by a licensed doctor from a clinic approved by the Saudi embassy. Each copy must include a photograph and the doctor’s signature.
• Police report: Detailing any criminal records, issued within six months of the application.
• Notification of employment visa number: Provided by the sponsor from the Ministry of Foreign Affairs in Saudi Arabia, along with the date of issue.
• Application fee: Typically paid by the employer. If the employee needs to arrange this personally, they should verify the payment method with the employer and the embassy or consulate in their home country.

For further details, you can visit the Saudi Ministry of Human Resources and Social Development website.

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 summarises the various immigration alternatives that are available for the employees, contractors and visitors of a company. It is important to note that each country has its own procedures and requires documents.

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

New Visa Categories in Saudi Arabia

These new visa categories are part of Saudi Arabia's broader efforts to attract foreign investment and tourism, supporting the Kingdom's Vision 2030 objectives.

Investor Visa

Saudi Arabia has introduced a new electronic visa specifically designed for visiting investors. This visa aims to promote foreign investment and simplify the process for business exploration in various sectors within the Kingdom. Initially available for 60 nations, this program has now been expanded to all nations worldwide, making it easier for international investors to engage with Saudi markets.

Instant Visa

The new instant e-visa is available for individuals who hold permanent residency in the UK, US, or EU, or those with valid visas from these regions. This visa facilitates easier access for business and tourism, streamlining entry procedures for eligible applicants. The application process is conducted online, offering a convenient and quick way to obtain entry permits.

In Saudi Arabia, the tax year runs from January 1 to December 31. This calendar year basis is used for both corporate income tax and zakat (a form of alms-giving treated as a religious obligation or tax).

Businesses are required to file their tax returns by the 30th of April following the end of the tax year.

Income Tax in Saudi Arabia

There is no tax payable on salaries for foreign employees in Saudi Arabia, and self-employed foreigners are only taxed on overseas-earned income.

Saudi Arabia has a double tax treaty with France, and similar arrangements with the UK and Germany. Certain countries, including the US, UK, Germany and Japan give their citizen’s tax allowances against any tax paid in Saudi Arabia.

Saudi Arabia has an extensive social security system which provides old age, disability and survivor benefits for its employed and self-employed nationals.

General Organisation for Social Insurance

Employers must pay 2% of the employee’s wage to the General Organisation for Social Insurance (“GOSI”) for all employees. This is to cover injuries sustained through occupational hazards.

In addition to the 2% employer GOSI contribution, all Saudi national employees are subject to 9% employee and 9% employer annuities contributions and 0.75% employee & 0.75% employer unemployment insurance contributions which fall under GOSI.

When an employee is provided with housing and no allowance is mentioned, the contributory value is equivalent to 2-month basic salary or 16.67% x Basic Salary.

Maximum salary amounts subject to GOSI are:

• Under Annuities Branch (Saudi nationals) – minimum of SR 1,500 per month is subject to GOSI contribution, an employee earning less than this minimum amount will pay social insurance equal to an employee earning SR 1,500, i.e (1,500 x 9.75%= 146.25).
• Contribution would not be applicable on earnings greater than SR 45,000 per month. The maximum contribution an employee is liable for is 45,000 x 9.75% = 4,387.5.
• The contribution under Annuities branch applies only to the Saudi nationals and is paid by the employer and employee, a total rate of 18% (9% employer and 9% employee).
• Under Occupational Hazard Branch – minimum of SR 400 per month is subject to GOSI contribution, an employee earning less than this minimum amount will pay social insurance equal to an employee earning 400, i.e (400 x 2% = 8).

The contributions for Occupational Hazard and annuities of the worker shall no more be paid with effect from the date on which the employees reach age fifty.

In case the employee has 50 years old will subscribe for all branches, for unemployment up to 59 years old.

The system clarifies that no contributions will be collected for increases that occur in the employee’s subscription fee starting from the date before the age of fifty, except within the limits of (10%) of the subscription fee due in the preceding insurance year. The contribution would not be applicable on earnings greater than SAR 45,000 per month.

The contribution an employee is liable for is as follows

The contribution under Occupational Hazard relates to both Saudi and Non-Saudi nationals and is paid by the employer only through SADAD system. (Payment is not made individually, it is made through the monthly bill)

In Saudi Arabia, businesses are required to comply with several key tax reporting and filing obligations. Below are the primary reporting requirements and their respective deadlines:

Corporate Income Tax and Zakat

• Filing deadline: The tax year in Saudi Arabia runs from January 1 to December 31. Companies must file their annual corporate income tax and zakat returns by April 30 of the following year.
• Payment deadline: Any tax due must be paid by the same April 30 deadline.

Value Added Tax (VAT)

• Monthly filers: Businesses with an annual turnover exceeding SAR 40 million must file monthly VAT returns. The deadline for filing and payment is the last day of the month following the end of the tax period (e.g., for January, the deadline is the end of February).
• Quarterly filers: Businesses with an annual turnover of SAR 40 million or less must file quarterly VAT returns. The deadlines are as follows:
  • Q1 (January-March): April 30
  • Q2 (April-June): July 31
  • Q3 (July-September): October 31
  • Q4 (October-December): January 31 of the following year

Withholding Tax

• Filing deadline: Withholding tax returns must be filed by the 10th day of the month following the month in which the payment subject to withholding tax was made.
• Payment deadline: Payment of the withheld tax is due by the same deadline.

Excise Tax

• Filing deadline: Monthly excise tax returns must be filed by the 15th day of the month following the end of the tax period.
• Payment deadline: Payment of the excise tax is due by the same deadline.

General Organisation for Social Insurance (GOSI)

• Filing deadline: Employers must file monthly GOSI contributions by the 15th day of the month following the month in which the contributions are due.
• Payment deadline: Payment of the GOSI contributions is due by the same deadline.

In Saudi Arabia, it's mandatory to register new employees as soon as the employment contract is signed. This process ensures compliance with local labor laws and the proper administration of employee benefits.

Expat Employees

 Expatriate employees are registered during the visa application process. In addition to the visa registration, expat employees must also be registered with the General Organisation for Social Insurance (GOSI). The GOSI registration is completed through an online portal, where each entity is assigned a unique GOSI number. This number is essential for managing social insurance contributions and benefits.

Saudi Employees:

For Saudi nationals, registration with GOSI is part of the onboarding process and should be completed on their first working day. This registration ensures that Saudi employees are covered under the Kingdom’s social insurance system from the start of their employment.

By promptly registering all employees with the appropriate authorities, companies can ensure compliance with Saudi labour laws and provide employees with the necessary social insurance benefits. For more information on the GOSI registration process, visit the GOSI website.

Saudi Law states that a probation period should not last any longer than 90 days and is possible to extend to another period Subject to the employee's approval.

When an employee leaves a company in Saudi Arabia, there are specific procedures and entitlements that must be followed to ensure compliance with local labour laws.

De-registration from GOSI

All departing employees must be de-registered from the General Organisation for Social Insurance (GOSI) through the GOSI online portal. This step is crucial to update the employee's insurance status and ensure accurate records.

Notice Period Entitlements

During their notice period, employees are entitled to eight fully paid hours per week or a full day per week to search for alternative employment. This allows employees time to secure new job opportunities while still being compensated by their current employer.

Termination by Employer

If an employer decides to terminate an employee, there must be a valid reason for doing so. Acceptable reasons for termination include:

• Gross misconduct: Serious breaches of company policy or ethical standards.
• Violence: Any form of physical altercation or threat of violence.
• Prolonged absence without reason: Extended periods of unapproved absence.
• Probationary period: Employees who are still within their probationary period may be terminated if they fail to meet the required performance standards.

In Saudi Arabia, it is legal to provide employees with online payslips and there are no specific procedures mandated by law regarding the format or delivery method of payslips.

Employers should include the following components in the employee’s payslip:

• Basic salary: The primary fixed income before any additions or deductions.
• Allowances: Additional payments such as housing, transportation, and other allowances.
• Deductions: Any amounts subtracted from the gross salary, including social insurance contributions and any other applicable deductions.
• Net salary: The total amount paid to the employee after all deductions.

Salaries are typically paid on a monthly basis. Employers must ensure that payments are made promptly and in accordance with the employment contract.

Wage Protection System (WPS)

All entities with more than 10 employees are required to process their payroll payments through the Wage Protection System (WPS). This system ensures that employees are paid on time and in full, promoting transparency and compliance with labour regulations. 

Reporting

Employers in Saudi Arabia are required to maintain accurate payroll records to demonstrate compliance with Saudi labour laws. These records should be kept for at least seven years and include details of all payments, deductions, and contributions to social insurance.

Saudi Arabian Payslip Example

Employment Contracts in Saudi Arabia

Foreign nationals account for about half of Saudi Arabia’s workforce. All Employees should be provided with an employment contract in writing, specifying all details of the remuneration package. Anything agreed verbally is not covered by a contract, so it is important that all the important aspects are written down.

The majority of employment contracts in Saudi Arabia are "single-status," which means that even if you are married, your spouse and/or family members cannot accompany you to Saudi Arabia. Only some senior or administrative and medical contracts allow family members to travel to and live in Saudi Arabia. It is possible to bring in your family members if the contract stipulates this, and the employee’s profession is one of the professions permitted to bring in the family.

The employment contract types and the respective considerations have been summarised below.

Holiday Accrual and Calculations in Saudi Arabia

Employees in Saudi Arabia accrue vacation days based on their length of service:

• Up to 21 calendar days: Employees earn 21 calendar days of vacation each year.
• After 5 years of service: Employees are entitled to 30 days of vacation per year.

Hajj Leave

Employees with at least two years of continuous service with their employer are entitled to paid leave for the Hajj pilgrimage. This leave ranges from 10 to 15 days, inclusive of the Eid al-Adha holiday.

Special Leave

• Employees are entitled to three days of paid leave on the occasion of their marriage.
• In the event of the death of an immediate family member (ascendant or descendant), employees are entitled to three days of paid leave. Immediate family members include parents, grandparents, children, and grandchildren.

Maternity Leave in Saudi Arabia

A female worker is entitled to maternity leave for the four weeks immediately preceding the expected date of delivery and the six weeks following delivery. The expected delivery date must be determined by the firm's physician or supported by a medical report certified by a health authority. During the six weeks immediately following delivery, a woman is prohibited from working.

Compensation during maternity leave

• Half Wage: If the female worker has been in service for one year or more.
• Full Wage: If the female worker has served for three years or more as of the date of commencement of the maternity leave.

If a female worker has taken maternity leave with full pay within the same year, she will not be paid during her regular annual leave. If she has taken maternity leave at half pay, she will receive half her wage during her annual leave.

The employer is responsible for paying the female worker during her maternity leave as specified by the law.

Employers are required to provide medical care for female workers during pregnancy and delivery.

Upon returning to work after maternity leave, female workers are entitled to an additional rest period or periods not exceeding one hour per day for nursing their infant. This nursing time is considered part of the actual working hours and does not result in any wage reduction.

An employer cannot terminate the employment of a female worker or issue a termination warning while she is on maternity leave.

Paternity Leave in Saudi Arabia

Under recent amendments to Saudi Arabian labor laws, paternity leave for fathers has been increased from one day to three days.

During the three days of paternity leave, fathers are entitled to full pay. The employer is responsible for paying the employee's salary during this period.

Employers cannot terminate the employment of a male worker or issue a termination warning during his paternity leave. This job protection ensures that fathers can take their entitled leave without fear of losing their jobs.

Sick Leave in Saudi Arabia

A worker whose illness has been medically proven is entitled to sick leave benefits. The entitlements are structured as follows within a single year, starting from the date of the first sick leave:

• First 30 days: Full pay
• Next 60 days: Three-quarters of the wage
• Following 30 days: Unpaid

These periods can be continuous or intermittent throughout the year. For the purposes of sick leave, a single year is defined as the year beginning from the date of the first sick leave taken.

The employer is responsible for paying the employee's sick leave wages as outlined above. 

To be eligible for sick leave, the worker must provide proof of illness through a medical report certified by a recognised health authority.

Employers cannot terminate the employment of a worker during their sick leave if they have provided valid medical proof of illness. This job protection ensures that employees can recover from their illness without fear of losing their job.

National Service in Saudi Arabia

National service is not mandatory in Saudi Arabia

As of 2024, the national minimum wage for Saudi citizens working in the private sector has been increased to 4,000 Saudi Riyals per month. 

The typical working week in Saudi Arabia is from Sunday to Thursday, 9 am to 6 pm. Friday is the official weekend day, while Saturday is often a working day for the construction and service industries.

Working hours regulations by employee type in Saudi Arabia

1. Discussions are ongoing regarding changes to the weekly working hours to 40 hours. Exemptions apply to managerial level employees, guards, janitors, and during emergencies, inventory, or month/year-end closing (max 30 days/year).
2. The most common approach is the 48-hour workweek.
3. With approval from the Ministry of Labor (MOL), working hours may exceed eight hours a day up to forty-eight hours a week, provided the average working hours over three weeks do not exceed eight hours a day or forty-eight hours a week.
4. With MOL approval, the 30-minute break requirement may be waived, and breaks are scheduled by the company.

Ramadan Working Hours in Saudi Arabia

Regular employees, shift employees, and female employees have reduced working hours during Ramadan: 6 hours/day and 36 hours/week.

There are multiple statutory holiday schedules within Saudi Arabia. Below are the statutory national holidays in Saudi Arabia for 2024.

Housing Allowance

Employers in Saudi Arabia often provide a housing allowance to employees to help cover the cost of accommodation. This benefit is common and can vary depending on the employee's position, salary, and the company's policy.

Transportation Allowance

A transportation allowance is typically offered to employees to cover commuting costs. This allowance helps employees manage the expenses related to traveling to and from work.

Food Allowance

Some companies provide a food allowance to help employees cover their meal expenses. This benefit is usually given in addition to the basic salary and can be offered in the form of meal vouchers or a monthly stipend.

Mobile Allowance

Employers may also provide a mobile allowance to cover the cost of phone usage related to work. This benefit ensures that employees remain connected and can communicate effectively for business purposes.

Expenses

Expenses incurred by employees in the course of their duties are usually reimbursed by the employer. These expenses are calculated based on the company's policies and the specific requirements of the client's project. This can include travel expenses, accommodation during business trips, and other work-related costs.

Key Updates for 2024 Relevant to Doing Business in Saudi Arabia

As businesses navigate the regulatory landscape in the Kingdom of Saudi Arabia, it's essential to stay updated with the latest changes and developments. Here are some key updates for 2024:

Increased Minimum Wage

Effective from 2024, the national minimum wage for Saudi nationals working in the private sector has been increased to 4,000 SAR per month. This change, supported by the Human Resources Development Fund (Hadaf), aims to enhance the welfare of Saudi workers and support the national labour market​

Changes to the Wage Protection System (WPS)

All entities with more than 10 employees are required to process payroll through the Wage Protection System (WPS). This system ensures that employees are paid on time and in full, promoting transparency and compliance with labour regulations​

Sick Leave Policies

The sick leave policy now stipulates that employees are entitled to:

• Full pay for the first 30 days.
• Three-quarters pay for the next 60 days.
• Unpaid leave for the following 30 days within a single year, whether continuous or intermittent. This policy ensures fair treatment and support for employees during illness​

Employers must update their sick leave policies to reflect these changes and ensure employees are aware of their entitlements.

Tax Reforms

Saudi Arabia is undergoing significant tax reforms to align with international standards and support Vision 2030. Key proposed changes include:

• New Income Tax Law: All income sourced in Saudi Arabia will be subject to corporate income tax, with certain exemptions such as profits from selling shares in a Saudi firm.
• Withholding Tax: New withholding tax rates are proposed, with payments for services potentially taxed at 10%, and 20% for recipients in preferential tax regimes.
• Deductible Expenses: Expanded to include real estate transaction tax and non-recoverable VAT payments.
• Compliance and Penalties: Stricter penalties for non-compliance and reduced statute of limitations for tax assessments from five to three years.

Reinforced Employee Benefits in Saudi Arabia

In 2024, Saudi Arabia has reinforced several employee benefits to enhance the well-being and satisfaction of its workforce. Here are the key aspects of these benefits:

• Housing Allowance Employers in Saudi Arabia typically provide a housing allowance to employees to help cover accommodation costs. This benefit is a significant component of the overall compensation package and is crucial for attracting and retaining talent, especially expatriates.
• Transportation Allowance A transportation allowance is provided to employees to cover commuting expenses. This allowance ensures that employees can travel to and from work without incurring additional financial burdens. It is particularly important in urban areas with significant commuting distances.
• Food Allowance Employers often provide a food allowance to support employees with their daily meal expenses. This benefit can be offered as a monthly stipend or meal vouchers, contributing to the overall job satisfaction and well-being of employees.
• Mobile Allowance To ensure employees remain connected for business purposes, a mobile allowance is provided. This allowance covers costs related to work-related phone usage, enabling employees to communicate effectively and efficiently.
• Medical Care Employers are required to provide medical care for female workers during pregnancy and delivery. This benefit ensures that female employees receive necessary medical attention and support during these critical periods, promoting their health and well-being.

Paternity Leave

Under recent amendments, in 2024 paternity leave for fathers has been increased from one day to three days, with full pay. 

Sponsorship and Visa Regulations

In 2024, Saudi Arabia has introduced significant reforms to streamline the sponsorship and visa regulations, which are essential for employers and expatriate employees. These updates aim to enhance the Kingdom’s labour market and support the goals of Vision 2030.

Sponsorship Reforms:

• Job Mobility: Expatriate workers can now transfer their employment to a new employer without the need for their current employer’s consent upon the expiry of their work contract. This increases job mobility and flexibility within the labour market (Saudi Expatriates).
• Digital Documentation: Employment contracts and government services are now documented and processed digitally through the "Absher" and "Qiwa" portals. This enhances transparency and accessibility for both employers and employees (USSBC).
• Elimination of Exit Permits: Expatriate workers no longer need exit permits from their employers to leave the country, allowing them to travel more freely (Saudi Expatriates).

Visa Application Process

• Opening an Immigration File: Employers must open an “immigration file” at the Ministry of Interior to start the visa application process for their employees.
• Document Submission: Necessary documents must be submitted to the Saudi embassy, including a valid passport, passport photographs, a completed application form, a copy of the employment contract, and medical and police reports.
• Compliance: Employers are responsible for ensuring compliance with all legal requirements, including having documents certified by relevant authorities like the Chamber of Commerce and the Ministry of Foreign Affairs (Wego Travel Blog, VisaLiv).

New Visa Categories

• Investor Visa: To promote foreign investment, a new electronic visa for visiting investors has been introduced, simplifying the process for business exploration in Saudi Arabia.
• Instant Visa: This new e-visa is available for individuals with permanent residency in the UK, US, or EU, or those holding valid visas from these regions. This visa facilitates easier access for business and tourism.

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.