Saudi Arabia Payroll Services

At Bradford Jacobs, we navigate the administration of the Saudi payroll system for you. We do the work, so you do not have to.

Saudi Payroll

It is essential for companies planning to run Payroll Services in Saudi Arabia to have a clear plan and make the right moves from day one. The government exerts strong control over business activities but encourages private enterprises to generate diversity and a greater role for Saudi nationals on company payrolls.

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As a strong move in this direction, Saudi Arabia issued 44 licenses for multinationals to move their headquarters to Riyadh, including PepsiCo, Deloitte, Unilever and Baker Hughes. From 2023, foreign companies will need a regional headquarters in Saudi Arabia to qualify for a foreign investment license.

Some of the targeted companies have regional headquarters in the neighbouring United Arab Emirates, which the Saudi Arabians want to rival as the No. 1 business hub for West Asia and the Middle East.

Challenges come alongside the potential benefits. Payroll management is among those challenges, whether your company is considering moving employees abroad or hiring new staff in-country. Employment laws, payroll and income tax regulations are areas where you cannot afford mistakes.

Bradford Jacobs’ Professional Employer Organisation (PEO) and Employer of Record (EOR) platforms and networks provide complete answers to every question your company will encounter before you move into the economy, especially when it comes to operating payroll.

  • Remote payroll – This option allows businesses to operate under a single payroll system, by adding employees in Saudi Arabia to your parent company’s payroll. However, these employees must operate under different regulations, which is likely to cause problems.
  • Internal payroll – You may operate payroll for your subsidiary, especially if you are committed to growing your company’s presence in Saudi Arabia. However, this does require hiring dedicated HR staff who understand Saudi employment and compliance laws.
  • Saudi Arabias’ payroll processing company – If you are considering outsourcing, then working with a Saudi payroll company will help in processing your payroll – but not when it comes to compliance.
  • Saudi Arabias’ payroll outsourcing – However, there is another option available that solves both concerns – by working with Bradford Jacobs. We can handle payroll and compliance for all your employees in Saudi Arabia. We take the administrative stress off your shoulders so you can focus on what you do best.

International companies planning to hire staff and operate payroll services in Saudi Arabia must establish a subsidiary as an independent legal entity. This is essential even though no personal income tax is levied on employees’ salaries. Employers must still deal with the Zakat, Tax and Customs Authority (ZATCA) – ‘Zakat’ being the 2.5% annual deduction for charitable and religious purposes. Additionally, employers and employees must register with the General Organization for Social insurance (GOSI).

The obligations of operating payroll and complying with employee entitlements are one element that companies must balance against expanding into the formidable Saudi economy.

The first step is to set up the subsidiary in Saudi Arabia, with the most popular choice being a private limited liability company (LLC). The subsidiary is a legal entity separate from the parent company, which, along with shareholders or partners, is liable only to the extent of their contribution to the invested capital.

The lengthy procedures begin with applying to the Ministry of Investment Saudi Arabia (MISA), formerly Saudi Arabia General Investment Authority (SAGIA) pre-2020, and eventually receiving the commercial registration certificate. Post-incorporation, applying for and receiving various certificates and official documents can take several months.

There is an alternative route through Saudi Arabia’s complex corporate landscape, with Bradford Jacobs effectively and efficiently establishing your company’s place in the Saudi economy. We recruit the staff in-country, then put into action our comprehensive knowledge of tax and payroll regulations. Sourcing local staff with an ‘iqama’ (resident work permit) speeds up the process. As part of the service, Bradford Jacobs directly deals with the tax and social security authorities from our payroll system. Procedures are still complex, but your new staff can be up and running in days rather than the months it would take to set up a legal entity in the country.

Outsourcing payroll in Saudi Arabia will streamline your operations by dealing with the following procedures for onboarding staff:

  • All contracts must be logged and approved through the online Qiwa website.
  • Once the contract is signed, register the employee online with GOSI. All Saudis must be registered, and expats can elect to register independently of their employer.
  • Register employees with ZATCA. Although there is no personal income tax on Saudi-sourced income, withholding taxes apply to non-residents.

Note: Foreigners entering Saudi Arabia to work require a sponsor (kafeel), a company or an individual and must have a written employment contract.

Foreign companies must establish a subsidiary in Saudi Arabia to hire staff and operate payroll. The most popular choice is a private limited liability company (LLC).  Companies are governed by the Companies Law, as amended in 2016. Subsequently, in 2020 the Ministry of Commerce and the Capital Markets Authority published a ‘Draft Law’. Among changes, it removed the restriction on a single shareholder LLC being owned by another single shareholder LLC.

There are specific procedures and requirements for foreign companies setting up a subsidiary, including:

  • Obtain pre-approval for the application for an international investment license from the Ministry of Investment Saudi Arabia (MISA), formerly Saudi Arabia General Investment Authority (SAGIA) pre-2020, by submitting a comprehensive business and financial plan.
  • Reserve a unique company name with the Ministry of Commerce (MOC) and submit Articles of Association.
  • Make a formal application to the MOC to receive the Registration Certificate.
  • Register for taxation with the Zakat, Tax and Customs Authority (ZATCA) – ‘Zakat’ is the 2.5% annual deduction taken to support charitable and religious purposes, which for a company is assessed on various criteria.
  • Additionally, employers and employees must register with the General Organisation for Social insurance (GOSI).
  • Secure lease agreement for business premises and register with the appropriate municipality. This process can take up to three months, after which GCC and Saudi nationals can begin operations, but not foreign-owned subsidiaries.
  • Open a business bank account.
  • Submit municipality lease, tax number, registration certificate, and bank’s confirmation of deposited share capital to MISA, who then issue the foreign business investment license. At this point, the business can start operating.
  • There is no statutory minimum for share capital, but MISA requires foreign LLCs to have a minimum capital of at least SAR 500,000 (€130,750, US$133,180).
  • The subsidiary must publish a résumé of the Articles of Association in the Official Gazette, register with the relevant chamber of commerce and produce a company seal.
  • A minimum of one shareholder is required under the new Companies Law (2016), before which the requirement was for two. The shareholder can be a person or entity. There is no requirement for the number of directors.

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