Kingdom of Saudi Arabia

Saudi Arabia does not impose personal income tax on employment income for individuals, regardless of their residency status. Salary income remains tax-free for Saudi nationals and expatriates. Instead, the tax system focuses on business taxation, including corporate income tax, Zakat, VAT and certain withholding taxes. Corporate income tax is imposed on non-Saudi and non-Gulf Cooperation Council (GCC) shareholders in companies, while Saudi and GCC nationals are subject to Zakat, a form of Islamic wealth tax. Zakat is collected and enforced by the Zakat, Tax and Customs Authority (ZATCA).

Although there is no income tax on salaries in Saudi Arabia, employers must comply with mandatory social insurance contributions through the General Organization for Social Insurance (GOSI). Saudi nationals employed in the private sector are required to contribute to pension and unemployment insurance schemes, while employers additionally fund occupational hazard schemes for workers of all nationalities. Contributions are calculated on the insurable salary, which typically includes basic salary and housing allowance, subject to a monthly cap of SAR 45,000. Employers and employees each contribute 9% toward pension and social benefits, plus 0.75% each for unemployment insurance (SANED). Employers also pay 2% for occupational hazard insurance. Non-GCC foreign employees only require the employer to pay the 2% occupational hazard contribution. For Saudis covered by the previous social insurance system and registered before 3 July 2024, the total employer contributions are 11.75% and employee contributions 9.75%, covering retirement, unemployment and workplace injury. For Saudi employees registered from 3 July 2024, a reformed contribution structure applies. Rates begin at the same levels as existing employees but increase annually by 0.5% for both parties, reaching 11% each by 2028 (22% total). From 1 July 2026, both employer and employee contribute 10% to the pension branch. Including SANED and occupational-hazard contributions, this results in a total employee contribution of 10.75% and a total employer contribution of 12.75%. GCC citizens are registered with GOSI but their contributions are sent to their home countries per GCC agreements, with their social insurance governed by their own national laws, not Saudi Arabia’s.

Employers are required to comply with statutory social insurance reporting and payment deadlines. While there is no personal income tax on salaries, employers must report and pay social insurance contributions to GOSI, covering pension, unemployment (SANED) and occupational hazard schemes. These contributions must be reported and paid by the 15th of the month following the payroll month. Employers are required to submit detailed payroll data, including employee salaries and contribution amounts, through GOSI’s online portal.

Payroll providers and employers are required to maintain meticulous payroll records, including employee contracts, wage details, social insurance registrations and contributions, and working hours, and adhere to strict compliance standards. Employers must register with key government entities such as the Ministry of Human Resources and Social Development (MHRSD), GOSI and the Qiwa digital platform, and ensure that all employment contracts are digitally authenticated. Payroll must be processed through approved banking channels and reported monthly via the Wage Protection System (WPS) to confirm timely and accurate salary payments. In practice, payroll reporting and salary payments are now integrated through digital platforms such as Mudad, which connects with GOSI, Qiwa and banking systems to support automated compliance monitoring and validation of salary payments. Employers engaging expatriate employees are also obligated to register those employees in systems like Muqeem for residency and work permit management. Payroll and employment records must be retained for at least five years after an employee’s departure. Failure to comply with reporting obligations, late payments or submission of incorrect information can result in penalties, including financial fines and potential suspension of services. MHRSD and GOSI have the authority to conduct audits and impose sanctions for non-compliance.