There are specific rules for payroll and taxation in Saudi Arabia, depending upon the type of company structure chosen. The primary concerns for a foreign company that needs to comply with tax laws in Saudi Arabia are: individual income tax, social security costs, payroll tax, sales tax, withholding tax, business (Zakat) wealth tax and permanent establishment concerns.
A remote payroll in Saudi Arabia is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Saudi Arabia. One option for a non-resident company to payroll its employees (local and foreign) in Saudi Arabia is to use a fully outsourced service like a GEO which will employ and payroll the staff on their behalf.
In some cases, a company will register their business in Saudi Arabia under one of the forms available, but might prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. The payroll calculations, payments and filings can however, all be outsourced to the payroll provider.
Larger companies with a commitment to Saudi Arabia may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who possess the relevant background necessary to manage a Saudi Arabian payroll, and can also fulfill all tax, withholding, and payroll requirements.
This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Saudi Arabian employment laws.
Companies can outsource the employment and payroll of their staff in Saudi Arabia to a GEO, like Shield GEO. This is possible for both foreign workers and Saudi Arabian nationals. This is the easiest, fastest and safest way to payroll staff in Saudi Arabia.
Shield GEO manages all aspects of payroll for workers in Saudi Arabia including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.
Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.
Read more about outsourced payroll and employment through Shield GEO.
SAR – Saudi Arabian Riyal
It is fixed to the USD at the rate of USD 1 = SAR 3.75
|Corporate Income Tax ?||
20% of net adjusted profits.
|Income Tax Rate ?||
|Payroll Tax ?||
|Sales Tax ?||
|Withholding Tax ?||
Withholding Tax is applied to payments to a non-resident party.
Dividend WHT 5%
Interest WHT 5%
Royalty WHT 15%
These figures can be reduced by treaty agreements. Withholding Tax is payable within 10 days of the month following the initial payment.
|Employee Social Security (EE SS)||
GOSI of 10% applies to Saudi nationals
There is no GOSI or employees social security for foreign nationals
|Employer Social Security (ER SS)||
GOSI – employers social security is calculated on a monthly basis. The rate is 2% for expats and 12% for Saudi nationals.
It is assessed based on the total monthly remuneration in the following categories (subject to an upper limit of SAR 45,000 per month).
1. Basic wage
2. Housing allowance
3. Commission payments
Saudisation requirements may apply for employers where less than 50% of employees are Saudi nationals