Cost to employ in Saudi Arabia

The total cost to employ in Saudi Arabia consists of the gross salary, a mandatory social insurance contribution (GOSI), an end-of-service gratuity provision, and for expatriate hires an annual work permit levy plus visa, Iqama, and health insurance costs. There is no personal income tax on employment income in Saudi Arabia.

The calculator above computes these components from published statutory rates and returns a monthly recurring cost and a first-year total that includes one-off onboarding expenses. The figures are indicative, based on standard assumptions, and do not include any provider service fee or commercial margin. Standard VAT of 15% applies to service fees but not to employee wages or statutory contributions.

Every employer in Saudi Arabia pays a gross salary plus mandatory employer contributions. The main statutory components are GOSI social insurance and an end-of-service gratuity provision. For expatriate employees, the employer also bears the work permit levy and onboarding costs described in the next section.

GOSI (social insurance)

The GOSI contribution base is the employee's basic salary plus housing allowance, capped at SAR 45,000 per month. The transport allowance is excluded from the insurable base. For expatriate employees the employer rate is 2%, covering occupational hazards only. For Saudi nationals the employer contribution is around 12%, covering pension (annuities), SANED unemployment insurance, and occupational hazards, with rates phasing upward under the 2024 Social Insurance Law amendments.

End-of-service gratuity

Gratuity accrues from the first day of employment. The formula under Saudi Labour Law is half a month's wage per year for the first five years and one month's wage per year thereafter, pro-rated for partial years. On employer-initiated termination the full accrued amount is payable regardless of length of service. On resignation the entitlement is tiered: no gratuity below two years, one third from two to five years, two thirds from five to ten years, and the full amount at ten years or more. Gratuity is calculated on basic salary plus housing allowance, with transport excluded.

Notice period

The statutory notice period is 60 days for all contract types, covering both fixed-term and indefinite contracts. Indefinite contracts may be given only to Saudi nationals.

Salary structure

The default salary structure used by this calculator is 60% basic, 25% housing, and 15% transport. This reflects a common market split, but the actual employment contract governs how the gross salary is divided. The split matters because it determines the GOSI-insurable base and the end-of-service gratuity base, both of which are basic plus housing.

Expatriate employees incur several one-off and annual costs on top of the recurring monthly salary and GOSI. These are shown in the calculator's "year-one onboarding" column rather than the monthly recurring figure because they are billed annually or as single events, not on a monthly cycle.

Work permit levy (Maktab Amal)

The expatriate work permit levy is SAR 800 per month per expatriate employee, reduced to SAR 700 where the establishment employs at least as many Saudi nationals as expatriates. The levy is employer-borne and billed annually in advance by the Ministry of Human Resources, which is why the calculator places it in the year-one total rather than the monthly recurring cost.

Visa, Iqama, and medical

Additional first-year costs include Iqama (residence permit) issuance or renewal at approximately SAR 650 per year, a work permit service fee of approximately SAR 100 per year, and an Iqama medical examination at approximately SAR 150. Mandatory health insurance premiums vary by plan and provider. Visa authorisation costs depend on the employee's nationality and role classification.

Why the monthly figure alone is misleading

Comparing expat and Saudi costs on a monthly basis alone understates the true cost of an expatriate hire. The calculator provides both a monthly recurring figure and a first-year total so the comparison is fair. The first-year total equals 12 months of recurring cost plus the onboarding costs above.

On a monthly recurring basis, a Saudi national typically carries a higher employer cost than an expatriate at the same gross salary. The difference is driven almost entirely by GOSI: the employer rate for a Saudi is around 12% versus 2% for an expat. At a SAR 50,000 gross salary, the monthly GOSI difference alone is approximately SAR 4,250.

However, the first-year total for an expatriate is typically higher once the work permit levy (SAR 9,600 per year at the SAR 800 rate), visa authorisation, Iqama fees, medical examination, and health insurance are included. These onboarding costs do not apply to Saudi nationals. The calculator above shows both the monthly and first-year figures so the comparison reflects the actual cost in each case.

The FX reference rate used is USD 1 = SAR 3.75, the long-standing SAMA peg.

A Saudi commercial registration is required to sponsor work visas, register employees with GOSI, process payroll through the Mudad wage protection system, and authenticate employment contracts on the Qiwa platform. Companies that do not have a Saudi entity can employ staff through an employer of record (EOR).

Under an EOR arrangement, the EOR entity is the legal employer on its own Saudi commercial registration. It handles visa sponsorship, Iqama issuance and renewal, GOSI registration and monthly filings, Mudad payroll processing, and Qiwa contract authentication. The worker reports to and is directed by the client company. The EOR entity's Nitaqat band and activity classification determine the visa capacity available for the deployment.

For a detailed overview of the EOR model in Saudi Arabia, including deployment timelines, Saudization management, and the difference between direct-entity and aggregator approaches, see the employer of record Saudi Arabia guide.

How much does it cost to employ someone in Saudi Arabia?

The total employer cost comprises the gross salary, a mandatory GOSI social insurance contribution, an end-of-service gratuity provision that accrues from the first day, and for expatriate employees an annual work permit levy of SAR 800 per month billed upfront, visa and Iqama fees, and mandatory health insurance. There is no personal income tax on salaries. On a monthly recurring basis, employer add-on costs for an expat at SAR 50,000 gross are typically around SAR 2,900 to SAR 3,200, but the full first-year cost is materially higher once the levy and onboarding are included.

Do I need a company or local entity to hire an employee in Saudi Arabia?

A local commercial registration is required to sponsor work visas and employ staff in the Kingdom. Companies without a Saudi entity can employ through an employer of record, which acts as the legal employer on its own Saudi registration. The EOR handles visa sponsorship, Iqama, GOSI, payroll through the Mudad wage protection system, and Qiwa contract authentication. The worker reports to and is directed by the client company, while the employment relationship sits with the EOR entity.

What is GOSI and how much does the employer pay in Saudi Arabia?

GOSI (General Organisation for Social Insurance) is the mandatory social insurance scheme covering pensions, occupational hazards, and unemployment insurance. The insurable base is basic salary plus housing allowance, capped at SAR 45,000 per month; the transport component is excluded. For expatriate employees the employer contribution is 2%, covering occupational hazards only. For Saudi nationals the employer contribution is around 12%, covering pension (annuities), SANED unemployment insurance, and occupational hazards, with rates phasing upward under the 2024 Social Insurance Law amendments.

How is end-of-service gratuity calculated in Saudi Arabia?

Gratuity accrues from the first day of employment under Saudi Labour Law. The formula is half a month's wage per year for the first five years and one month's wage per year thereafter, pro-rated for partial years. On employer-initiated termination the full accrued amount is payable regardless of tenure. On resignation the entitlement is tiered: no gratuity below two years, one third from two to five years, two thirds from five to ten years, and the full amount at ten years or more. Gratuity is calculated on basic salary plus housing allowance, with transport excluded.

What is Saudization and does it apply to foreign companies hiring in Saudi Arabia?

Saudization, formally the Nitaqat programme, requires private-sector employers to maintain a minimum percentage of Saudi nationals in their workforce. It operates on two layers enforced simultaneously: the establishment's overall Nitaqat band, determined by the entity's activity classification and total headcount, and profession-specific quotas that apply once a headcount threshold is met. As of 2026, profession quotas cover engineering, procurement, marketing, sales, and administrative roles. Both layers apply to any establishment employing staff in the Kingdom, regardless of whether the parent company is Saudi or foreign.

Does hiring through an employer of record change my Saudization or Nitaqat obligations?

The EOR is the legal employer, so its Saudi establishment carries the Nitaqat band that applies to the first layer. Profession-specific quotas, the second layer, are assessed against the roles on the establishment regardless of who directs the work. Both layers are evaluated at the same time. The practical effect is that the EOR entity's Nitaqat rating, its Saudi headcount, and its activity classification determine the visa capacity available for the deployment. The client company does not need its own Nitaqat band because it is not the sponsoring employer.

Is it more expensive to employ a Saudi national or an expatriate?

On a monthly recurring basis a Saudi national typically carries a higher employer cost because the GOSI contribution is around 12% versus 2% for an expat. However, expatriate employees incur a work permit levy of SAR 800 per month billed annually in advance, plus visa authorisation, Iqama issuance, medical examination, and mandatory health insurance costs in the first year. Once these are included the first-year total for an expat hire is typically higher than for a comparable Saudi national. Comparing only the monthly figure understates the true cost of an expatriate employee.