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 / pension (Saudi nationals) | ~9% (registered before Jul 2024); ~9.5%–10% (registered in 2026) |
| Occupational hazard insurance | 2% |
| Unemployment insurance — SANED (Saudi nationals) | 0.75% |
| Total employer contribution (Saudi nationals) | ~11.75% (registered before Jul 2024); ~12.25%–12.75% (registered in 2026, phased in over the year) |
| Occupational hazard (non-Saudi employees) | ~2% |
Non-Saudi (expatriate) employees are generally only subject to the occupational hazard contribution from the employer side. Saudi nationals registered under the newer social insurance law (most 2026 new hires) sit on a higher, phased-in contribution schedule than those already registered before July 2024.
| Contribution | Rate |
|---|---|
| Social insurance (Saudi nationals) | ~9% (registered before Jul 2024); typically higher for employees newly registered in 2026 under the newer social insurance law |
| Unemployment insurance — SANED (Saudi nationals) | 0.75% |
| Total employee contribution (Saudi nationals) | ~9.75% or more, depending on registration date |
| 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 processed through the mandatory electronic wage-reporting system, social insurance contributions, statutory benefits, and residence/work permit 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 residence and work permit, processes payroll through the mandatory wage-reporting system, files social insurance 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, residence and work permit sponsorship coordination, wage-reporting payroll configuration, social insurance 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 work-permit applications.
Social Insurance Administered by the national social insurance authority. 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 Calculated on final salary and length of service. For termination, contract expiry, or retirement, it accrues from the employee's first year and is payable in full. A reduced, tiered scale applies only to voluntary resignation: a third of the amount at 2 years' service, two-thirds at 5 years, and the full amount at 10 years or more.
- 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 | 120 days (30 days full pay, 60 days at 75% pay, final 30 days unpaid) |
| 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, residence and work permit sponsorship, and payroll processed through the mandatory electronic wage-reporting system, without entity overhead.