Saudi Arabia has a population of more than 34 million people, with the largest industries including oil, gas, mining, and real estate. There are many opportunities and challenges with starting a business in Saudi Arabia, so it is vital to research and know what to expect before you begin.

Payroll and Tax Considerations in Saudi Arabia:

  • Saudi Arabia mandates a minimum wage for all employees. The current minimum wage is SAR 4,000 per month for both private and public employees
  • Overtime is paid at 100% of the employee hourly wage, plus a bonus rate of 50% of basic pay
  • All work on Fridays and public holidays is considered overtime
  • Severance is paid for 15 days for each of the first 5 years of service and 1 month’s wages each year after that. Severance is paid regardless of the reason for termination
  • There is no personal income tax from employment in Saudi Arabia. Non-Saudi citizens are subject to taxes

HR and Statutory Requirements in Saudi Arabia:

  • The minimum paid annual leave is 21 days, increasing to 30 days after 5 years of employment
  • Employees are entitled to 120 calendar days of sick leave a year paid as follows; first 30 days at full pay, the following 6 days at 75% of wages, and the next 30 days unpaid
  • Female employees are entitled to a minimum of 10 weeks maternity leave including 4 weeks before delivery and 6 weeks after
  • Employees who have worked at least a year receive 50% of their wages during maternity leave, and those who have worked 3 years receive 100% of their wages
  • New fathers receive 3 days of paid paternity leave
  • The standard retirement age is 60 with at least 120 months of paid contributions. Early retirement can be taken at any age if the employee made at least 300 monthly contributions

Holidays in Saudi Arabia

  • May 3 – Eid al-Fitr
  • May 4 – Eid al-Fitr Holiday
  • May 5 – Eid al-Fitr Holiday
  • July 9 – Arafat Day
  • July 10 – Eid al-Adha
  • July 11 – Eid al-Adha Holiday
  • July 12 – Eid al-Adha Holiday
  • September 22 – Saudi National Day

To get started in Saudi Arabia or to simplify operations there, Blue Marble can help. We have a cloud-based payroll platform with customized monthly reporting to manage employees across all countries and currencies. With a US-based service team and direct access to in-country experts, you can ensure compliance, pay your employees across the globe, and optimize operations. To learn more, click here