Establishing and maintaining a Saudi Arabia payroll
Saudi Arabia has one of the largest economies in the world and the largest in the Middle East region. While this strength is largely built on oil reserves, the country has made efforts to diversify the economy in recent years and now has a far more balanced economy than in the past. There is a huge amount of opportunity in Saudi Arabia, which is what attracts many foreign organizations to do business there.
If you’re interested in expanding into Saudi Arabia, an important step will be hiring staff and setting up a payroll. This process is often difficult, with language barriers, cultural differences, and unique application procedures all potentially causing significant delays.
A solution to these potential issues is outsourcing. At Horizons, we specialize in providing global payroll services. We can establish and manage your Saudi Arabia payroll outsourcing abroad, using our expert understanding of Saudi Arabian business practices to get you up and running as quickly as possible, whether or not you already have a registered entity in the country.
Why choose the Horizons payroll solution?
If you have an entity
If your business has already registered an official entity in Saudi Arabia, then we can help you set up and run your in-country payroll, then manage the associated HR, administration, and compliance work.
This solution is ideally suited for large organizations with a long-term view to expansion in Saudi Arabia.
If you don’t have an entity
If your business has not yet registered an official entity in Saudi Arabia, then you have the option of hiring through our Saudi PEO. We will act as employer of record in the country, set up and manage your payroll, and handle associated HR, administration, and compliance.
This solution provides a low-risk and flexible route of entry into the Saudi Arabian market so you can focus on the important work expanding your business in the country.
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Saudi Arabia payroll guide
What are the withholdings and tax rules in Saudi Arabia?
Saudi Arabia does not have a standard income tax for Saudi and Gulf Cooperation Council (GCC) nationals, but foreign workers are charged a flat rate of 20%.
As an employer in Saudi Arabia, you are responsible for paying the Saudi Social Insurance Tax (GOSI).
In general, it is around 10% of salary, but the rate varies depending on income level. In addition to this, employers are required to pay 2% for insurance against occupational risk.
The corporate tax rate is 20%, and there is also a religious levy, called zakat, of 2.5% which applies to Saudi and GCC nationals.
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Social Insurance
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9.00%
|
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Unemployment Insurance
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1.00%
|
|
Occupational Hazard
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2.00%
|
|
Total Employment Cost
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12.00% |
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Social Insurance
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9.00%
|
|
Unemployment Insurance
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1.00%
|
|
Total Employee Cost
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10% |
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For Saudi Nationals
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0.00%
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Entitlements and terminations
When employing staff in Saudi Arabia, you should always lay out the specific terms of entitlements and terminations in a formal contract of employment.
These terms will generally come into effect after a probationary period, which is limited to a maximum of 90 days. It is common for employees to receive a severance package when their employment ends, the terms of which should have been outlined in their contract.
How to establish Saudi Arabia payroll outsourcing
An important part of the hiring and payroll process is Saudi Arabia is setting up a Saudi entity to act as employer of record. This process can be lengthy and expensive, often taking weeks or months.
You can bypass the unnecessary hassle by outsourcing to the Horizons Saudi payroll outsourcing experts. We’ll take care of everything for you, getting you set up within days. You can even hire using our subsidiary as employer of record, so you can focus on expanding your operations whether or not you already have a registered entity in Saudi Arabia.
Manage payroll in Saudi Arabia
Whether it’s EOR service or just payroll management, Horizons’ employment experts can help you get started in 24h.
