Saudi Arabia at a glance
Taxes in Saudi Arabia
Saudi Arabia imposes no personal income tax on employment income for individuals. Social security contributions vary significantly based on the employee's nationality.
| Contribution | Rate |
|---|---|
| Social insurance (Saudi nationals) | 9% |
| Occupational hazard insurance | 2% |
| Unemployment insurance — SANED (Saudi nationals) | 0.75% |
| Total employer contribution (Saudi nationals) | ~11.75% |
| Occupational hazard (non-Saudi employees) | ~2% |
Non-Saudi (expatriate) employees are generally only subject to the occupational hazard contribution from the employer side.
| Contribution | Rate |
|---|---|
| Social insurance (Saudi nationals) | 9% |
| Unemployment insurance — SANED (Saudi nationals) | 0.75% |
| Total employee contribution (Saudi nationals) | ~9.75% |
| Non-Saudi employees | No deductions |
| Income tax | 0% (no personal income tax) |
Employer of Record in Saudi Arabia
What Is an Employer of Record?
An Employer of Record is the legal employer of your worker in Saudi Arabia. Remote& takes on all compliance obligations under Saudi Labour Law — employment contracts, payroll through the Wage Protection System, GOSI contributions, statutory benefits, and work permit/iqama sponsorship — so you can hire in the Kingdom without establishing a local entity.
How Remote& EOR Works
| Party | Role |
|---|---|
| Your Company | Recruits the worker, directs daily work, manages performance |
| Remote& | Signs the employment contract, sponsors the iqama, processes WPS payroll, files GOSI contributions, manages statutory benefits |
| Employee | Fulfills their role for your company under a Saudi-compliant employment contract |
Ask Remi:
"Hire a Data Engineer in Saudi Arabia — 25,000 SAR/month, starting next quarter" Remi handles contract drafting, iqama sponsorship coordination, WPS payroll configuration, GOSI registration, and benefits enrollment — all in one conversation.
Benefits in Saudi Arabia
Private Health Insurance Private-sector employers are required to provide health insurance to foreign workers and their dependents. Health insurance proof is also required for visa and iqama applications.
Social Insurance — GOSI Administered by the General Organization for Social Insurance (GOSI). Saudi nationals receive full coverage including pensions and unemployment insurance (SANED). Expatriate employees are typically covered for occupational hazard insurance only.
End-of-Service Gratuity Upon completion of at least two years' employment, employees are entitled to end-of-service benefits calculated on the basis of final salary and length of service.
- Supplementary health insurance
- Transportation allowance
- Housing allowance
- Annual flight tickets home
- Education allowance
- Mobile phone
- Flexible working hours
- Retirement savings plans
Leave entitlements
| Leave type | Entitlement |
|---|---|
| Annual Leave | 21 days (1–5 years' service); 30 days (5+ years' service) |
| Sick Leave | 90 days (30 days full pay, 60 days half pay) |
| Maternity Leave | 12 weeks |
| Paternity Leave | 3 days |
Employment conditions
Working Hours
Standard hours are 8 hours per day and 48 hours per week. During Ramadan, working hours are reduced to 6 hours per day for Muslim employees. Overtime beyond standard hours must be compensated at a premium.
Probation
Probation periods may not exceed 90 days. This may be extended by written mutual agreement up to a maximum of 180 days in total.
Kafala System
Foreign workers in Saudi Arabia are linked to their employer through the Kafala sponsorship system, which makes the employer responsible for the worker's legal residency and work permit. Recent reforms under Vision 2030 have allowed many categories of workers to change jobs or exit the country without employer permission after meeting certain conditions. Domestic workers remain under a more restrictive framework. Remote& manages Kafala compliance on behalf of client companies.
Payments
End of employment in Saudi Arabia
Contracts may end through mutual agreement, contract expiry, resignation, or employer-initiated termination for valid cause (misconduct, poor performance, sustained absence). For indefinite-term contracts, advance notice or payment in lieu is required.
Termination without valid cause obliges the employer to compensate the employee. On all terminations, final dues must be settled promptly, including unpaid wages, accrued leave, and end-of-service gratuity calculated by length of service and final salary.
Frequently asked questions
Four paths exist: running payroll through your home entity (not compliant — visa and local contract obligations apply), engaging independent contractors (appropriate only for genuine project-based work), establishing a Saudi legal entity (time-intensive and requiring significant local setup), or partnering with Remote& as your Employer of Record. The EOR route gives you a compliant employment structure, iqama sponsorship, and WPS payroll without entity overhead.