Payroll in Saudi Arabia 2026: GOSI, end of service and WPS

Saudi Arabia has no personal income tax on salaries, so payroll revolves around GOSI social insurance. For a Saudi employee the employer withholds 9.75% and pays 11.75% on top, on basic pay plus housing allowance up to SAR 45,000 a month; for an expatriate the employer pays only 2% for occupational hazards and accrues the end-of-service award.

Payroll in Saudi Arabia at a glance

GOSI social insurance contributions

The General Organization for Social Insurance (GOSI) covers Saudi employees for annuities (pensions), unemployment through SANED and occupational hazards. Non-Saudi employees are covered only for occupational hazards.

The rates apply to the monthly contribution wage: the basic wage plus the housing allowance, whether paid in cash or provided in kind, and commissions, up to SAR 45,000 a month. Transport and other allowances are not part of the base. For a Saudi employee the total cost is 21.5% of the contribution wage, split 9.75% and 11.75%.

The 9% annuities rate is the standard rate. Saudis who entered the system for the first time under the new Social Insurance Law follow a separate schedule for the annuities branch, so use the rate GOSI shows for each employee rather than assuming 9%.

Income tax on salaries

There is no personal income tax on employment income in Saudi Arabia, for Saudis or expatriates. An employer therefore withholds no tax from salaries and files no payroll tax returns; the only statutory deductions are the employee's GOSI contributions. Companies are subject to zakat or corporate income tax on their own profits, but that does not change payroll.

Minimum wage, working time and mandatory pay

• Minimum wage: the Labor Law sets no general minimum wage. Pay is agreed in the employment contract.
• Working time: at most 8 hours a day under a daily standard or 48 hours a week under a weekly standard; in Ramadan, Muslim workers work at most 6 hours a day or 36 hours a week.
• Overtime: paid at the hourly wage plus 50%; with the employee's consent, paid compensatory days off can replace it. Work on holidays and official days off counts as overtime.
• Annual leave: at least 21 days a year, rising to 30 days after five consecutive years with the same employer, paid in advance.
• Pay dates: daily-rated workers are paid at least once a week and monthly-paid workers once a month, into their accounts at banks accredited in the Kingdom.

End-of-service award

Under Article 84 of the Labor Law, a worker whose contract ends receives an end-of-service award of half a month's wage for each of the first five years of service and one month's wage for each later year, calculated on the last wage received. A worker who resigns receives:

When the employer ends the contract, wages and all entitlements must be settled within one week; when the worker resigns, within two weeks.

Monthly payroll calendar and filings

• Every month: calculate GOSI contributions on each employee's contribution wage, withhold the Saudi employees' 9.75% and pay the total to GOSI.
• Wage Protection System: private employers pay wages into workers' bank accounts or salary cards and submit a monthly wage file through the ministry's electronic services, so HRSD can check that wages are paid on time and in full. Keep employees' wage data up to date whenever it changes.
• Changes: register new employees with GOSI and update their contribution wage when the basic wage or housing allowance changes.
• End of employment: settle the final wages and the end-of-service award within one or two weeks, depending on who ended the contract.

Keep the employment contract, the monthly wage files and each payslip, because the end-of-service award and GOSI contributions are both checked against them.

Worked example: SAR 13,500 a month

An employee paid a basic wage of SAR 10,000, a housing allowance of SAR 2,500 and a transport allowance of SAR 1,000, SAR 13,500 a month in total. The contribution wage is SAR 12,500 (basic plus housing). The Saudi column uses the standard 9% annuities rate.

On top, the employer should accrue the end-of-service award: after six years, for example, the award is 3.5 months of the last wage (five half-months plus one full month).

Common mistakes

1. 1Charging GOSI on the full gross pay, including transport and other allowances, instead of basic wage plus housing.
2. 2Ignoring the SAR 45,000 cap on the contribution wage for senior staff.
3. 3Deducting GOSI from expatriates, who pay nothing; their employer pays only the 2% occupational hazards.
4. 4Assuming 9% annuities for every Saudi employee without checking the rate GOSI applies to new entrants.
5. 5Paying overtime at the plain hourly wage instead of the hourly wage plus 50%.
6. 6Not accruing the end-of-service award month by month, or applying the full award to a resignation after three years instead of one third.

How Clientlly helps

Clientlly does not ship a built-in payroll profile for Saudi Arabia. An administrator enters Saudi Arabia's payroll rates once in the payroll tax settings: the income-tax bands (none), the personal allowance, the employee and employer contribution rates and the minimum wage. Clientlly then calculates gross to net and the employer contributions and produces payslips for each employee.

Alongside payroll, the human resources module handles leave requests and approvals with a leave calendar and keeps HR documents, and attendance and time tracking records working hours and overtime. To close the books after the payroll run, see our month-end close checklist.