Taxation in Saudi Arabia is quite unique, as various changes have been introduced. Among these, the value added tax is one of the most important. However, it is important to note that the government does not impose any tax income. This simplified the payroll system in Saudi Arabia quite a lot.
Below, our specialists explain the main aspects to consider when setting up a company and handling payroll in Saudi Arabia. In this last aspect, you can rely on our accountants in Saudi Arabia.
Social security contributions in Saudi Arabia
Saudi Arabia has a robust social security system that offers retirement, disability, and survivor benefits to its citizens who are employed and self-employed. Also, payroll taxes are quite low when it comes to the part paid by employees.
From the point of view of payroll in Saudi Arabia, here is how social security contributions are distributed:
- social security contributions amount up to 10% of the gross wage for employees;
- Saudi companies must pay social security contribution ranging from 12% to 13.5%;
- foreign nationals must also pay social security contributions if they are employed here.
If you want to come to this country for employment purposes, you can rely on our agents for support in applying for a residence permit for Saudi Arabia.
Here is a breakdown for social security payments for employees in Saudi Arabia:
- 9% must go to the social insurance fund;
- 1% will be directed to the unemployment fund.
For employers:
- 9% are paid for social insurance purposes;
- 1% for unemployment purposes;
- 2% must be paid as occupational hazard.
Most local businesses use the services of payroll companies in Saudi Arabia in order to streamline the process as much as possible.
Setting up the payroll in Saudi Arabia
As soon as an employment contract is signed, the employee must be registered with the payroll system in Saudi Arabia. Employees from other countries must register with the General Organization for Social Insurance (GOSI) in addition to being registered when applying for a visa. Each entity has a specific GOSI number, and the registration process is conducted using an online portal. On the first day of work, Saudi employees must be included as part of the onboarding procedure.
In Saudi Arabia, employers are required to withhold taxes and pay social security contributions as part of the payroll process on a monthly basis. Wages paid to employees are exempt from income tax, but social security taxes and withholding taxes for non-residents must be paid.
In Saudi Arabia, issuing employees with online payslips is acceptable by law, and payroll records must be maintained for at least 7 years.
If you need support in setting up the payroll in Saudi Arabia, you can rely on our local specialists.
We are also at your service with company formation services in Saudi Arabia.
Payroll services in Saudi Arabia
There are plenty of payroll companies in Saudi Arabia and the services offered by them are quite extensive, but most importantly are provided in accordance with the type of entity, number of employees, and needs of the soliciting business.
Using an outsourced service like that provided by our Saudi accountants which implies drafting payslips paying the personnel on their behalf, is one alternative for non-resident companies to handle the payroll for employees (local and foreign).
It is worth remembering that the business, as the employer, is entirely responsible for adhering to all applicable payroll, Saudi immigration, and employment laws. However, the payroll service provider may be hired to handle all the payroll computations, payments, and forms.
If you need payroll services in Saudi Arabia, do not hesitate to contact us.