Unravelling Saudi Arabia’s business complexities for the global mover.

Oct 18, 2023

Navigating the Move to Saudi Arabia: Tax, Immigration, and Employment Law Considerations 

At the crossroads of ancient trade routes, Saudi Arabia has always been a land of opportunity. Fast-forward to the present day, the Kingdom is redefining itself, transcending its image as the world’s oil reservoir to emerge as a beacon of innovation, commerce, and global talent. Driven by Vision 2030, a transformative agenda, Saudi Arabia strategically aligns itself as an enticing destination for businesses and professionals alike. This shift is not just about economic diversification; it’s about creating a sustainable ecosystem that blends tradition with modernity, offering a canvas of unmatched potential for new businesses. 

As the Kingdom of Saudi Arabia (KSA) emerges as a prominent global business hub, corporations and talent are considering relocating to this dynamic locale. The Kingdom’s revamped visa and employment policies draw global talent, from tech professionals to renowned sports personalities, reshaping Saudi’s socio-cultural tapestry. Initiatives like the Project RHQ and Premium Residency Programme beckon global investors, promising opportunities in entertainment, tourism, and more.  

Understanding the nuances of Saudi’s business, tax, and employment landscape is pivotal for those poised to embark on this venture. Need a navigator for this journey?  This article explores the consideration that comes with its intricate challenges and opportunities, chiefly in the realms of tax, immigration, and employment law. 

The Immigration Landscape: A Prelude to Opportunities 

As Saudi Arabia strides towards a more diversified economy and global integration, its immigration landscape is a testament to potential opportunities and collaborations.

• Navigating the Visa Quagmire

Saudi Arabia’s visa requirements, though stringent, are navigable. The complex process of obtaining Business, Employment, or Residence Visas is simplified for businesses with the assistance of partners like Centuro Global. Our profound understanding of the KSA’s immigration system ensures a streamlined and compliant transition for individuals and corporations. Learn More about tailored visa solutions. 

The Kingdom’s revamped visa and employment policies draw global talent, from tech professionals to renowned sports personalities, reshaping Saudi’s socio-cultural tapestry. 

• Temporary Work Visa/Increased Flexibility for the Engagement of Foreign Nationals 

A new short-term work visa for certain foreign nationals is now available to apply for on an online platform called Qiwa. This new visa enables qualified employees to work in the Kingdom of Saudi Arabia for a visa-sponsoring entity for up to 90 days per visa in one year.  

During the course of the one-year period (i.e., from the date of first entry into the Kingdom), it will be possible to re-apply for new temporary work visas at the end of each 90-day period. To apply, employers will need to be classified as at least “Medium Green” in the Saudization scheme, comply with obligations in the Wage Protection System, and ensure foreign workers have valid work authorization. The visa quota will be limited to 50 per employer, and visas will not be transferrable to other entities. 

As businesses look legally and compliantly for solutions, it is expected that many employers will take advantage of the new temporary work visa businesses in the Kingdom for short-term work assignments. In the future, it is expected that more foreign national-friendly programs will be implemented in Saudi Arabia, as additional foreign labour will be needed to fill positions in the NEOM – the cross-border city in the northwest of the Kingdom, which is planned for construction by 2025. 

• Impact on Talent Relocation

The comprehensive assistance in immigration ensures talents focus on integration and productivity rather than bureaucratic hurdles. The Kingdom’s beckoning opportunities make it an attractive destination for professionals globally, indicating a burgeoning multicultural professional landscape. 

Tax Implications: The Changing Tides 

The Saudi economy has been one of the strongest globally in recent years. The tax landscape has been drastically changed due to the pandemic and other social and political factors affecting the economy. The government has introduced new tax measures, such as laws and guidelines, to combat these changes, as well as the digitisation of the tax system.  

Saudi Arabian tax laws are determined by certain government legislation and frameworks. They regulate the different rules companies must follow when submitting tax returns. They also regulate the different types of tax to be paid by entities based on their status (either a public or private company, a resident or foreign company and whether they operate in particular industries and are subject to special taxes). 

The country has developed a Special Integrated Logistics Zone (ILBZ), a special economic zone located next to a major airport. Entities operating in this zone will benefit from special tax incentives related to customs.  

The country has increased the customs rates from the 2021 tax year forward. This increase will affect trading in various goods such as plastic, rubber, leather, machinery and equipment, vehicles and certain manufactured products.  

• Modern Measures and Strategic Adaptations

KSA’s tax landscape is witnessing revolutionary changes with innovations like digital tax collection and tax incentives for strategic zones, including the Special Integrated Logistics Zone. This evolution marks KSA’s stride towards a modern, globalized business ecosystem. Explore the detailed breakdown of the tax changes. 

• Embracing Digital Transformation in Taxation 

Platforms like “Zakaty” by the Zakat Tax and Customs Authority simplify tax processes, enabling businesses to ensure timely compliance. 

• Special Integrated Logistics Zone (ILBZ) & Tax Incentives 

Situated near King Khalid International Airport, the ILBZ provides businesses with lucrative tax benefits, particularly in customs duties. 

• Adjustments in Customs Rates 

Changes in customs duties necessitate strategic adjustments for businesses, impacting the import of specific goods. 

• Implications for Foreign Entities

With tax regulations varying for public, private, resident, and foreign entities, businesses must navigate a complex tax matrix to ensure compliance and optimization.  

For foreign entities, the nuanced understanding of tax laws ensures compliance, strategic planning, and optimal operation. The strategic zones offer tax leniencies that can be maximized for profitability, making the Kingdom an increasingly attractive investment destination. 

Employment Law: The Genesis of an Inclusive Work Environment 

Saudi’s employment paradigm is evolving, embracing inclusivity, fairness, and modernity. 

As part of ongoing reforms, a three-year Saudization plan has also been introduced to increase the Saudization rates. As part of this, the Ministry of Human Resources and Social Development (MHRSD) has consolidated the categories in which all economic activities (based on the business sector in which the employer operates) will be combined to create one larger economic activity. The new changes form part of the existing Saudization program in the Kingdom (Nitiqat), which imposes a quota system for hiring Saudi nationals for all companies in the private sector. Nitiqat classifies companies into three categories according to their Saudization levels: 

• Premium 
• Green (with subcategories of High, Medium and Low) 
• Red
  

Companies in the Premium and High Green categories can apply for new block visas. However, companies in the remaining categories can only obtain visas for expatriate employees through a transfer of sponsorship (i.e., they are limited to hiring expatriate employees who are already in the Kingdom and have the requisite work authorisations from their existing employer).  

Companies can pay monthly fees instead of hiring Saudi employees to maintain or change their Nitiqat classification under the Parallel Nationalisation program, which was introduced in 2017. The fee amount varies according to the company’s employees and the number of Saudi employees required to reach the next Nitiqat classification. Small companies with fewer than five employees are not subject to Nitiqat, provided they have at least one Saudi employee. 

• The MHRSD has announced that further professions will be localised from March 2023 with an aim to provide 33,000 job opportunities to Saudi nationals. Affected professions include aviation and customer service roles. The MHRSD has also confirmed that seven business activities’ sales outlets will be 70% Saudized, including security and safety equipment sales outlets, elevators, escalators, and conveyors. Branch manager, supervisor, treasurer, customer accountant and customer services agent jobs will all be subject to the decision. 
• Employers will need to plan their workforces going forward and consider the number of roles that must be occupied by Saudi nationals (and, in turn, which of their foreign workers will be required to remain within the workforce to ensure business continuity).
  

• Equality and Diversity in Focus

With initiatives by the Ministry of Human Resources and Social Development (MHRSD), there’s an evident shift towards broader labour law reforms that champion equality and diversity. These strides foster a work environment where talent, regardless of origin, can thrive. Read about the ongoing labour law evolution. 

•  Saudization and the Harmony of Talent  

As part of the Kingdom’s increased efforts to eliminate discrimination within the labour market, the Saudi Ministry of Human Resources and Social Development (MHRSD) have announced a new national policy to endorse equality of opportunities and treatment in employment in the Kingdom of Saudi Arabia.  

The newly approved policy contains a number of designated targets, including upgrading systems and policies that explicitly define and prevent discrimination, initiatives to promote equal treatment in employment and occupation, and the implementation of procedures, programs, and initiatives to enable groups with fewer opportunities to enter and remain in the labour market. 

With this recent announcement, there is a possibility to see changes to the Labour Law in the Kingdom that will incorporate wider safeguards in relation to equality and prevention of discrimination within the workplace. 

The Saudization initiative underscores a balance between local and international talent. For businesses, this means access to a diverse talent pool enriched with local insights and global perspectives. The policy fosters a harmonious blend of skills, expertise, and cultural diversity. 

• The Qiwa Platform & Temporary Work Visas 

Qiwa, an innovative platform, introduces flexible visa options, ensuring businesses can seamlessly onboard international talent for short-term projects. 

• Saudization and the Nitiqat Program 

With the aim to boost employment among Saudi nationals, the Nitiqat program encourages businesses to strike a balance between local and foreign talent. 

• Impact on Companies and Foreign Employees

Companies venturing into KSA are stepping into a diverse talent ecosystem. The evolving employment laws ensure an inclusive environment where international talent can thrive alongside local professionals. This evolution is marking KSA as a global talent magnet. 

Vision 2030: The Backdrop of Transformation 

Saudi Arabia’s Vision 2030 is a comprehensive blueprint mapping the country’s journey towards economic diversification and reduced oil dependency. It’s a commitment to fostering a vibrant society, a thriving economy, and an ambitious nation. Anchored in three pillars— a vibrant society, a thriving economy, and an ambitious nation—Vision 2030 promises a transformative journey for the Kingdom, with key goals from increasing foreign direct investment to boosting women’s participation in the workforce. 

“Our Vision is a strong, thriving, and stable Saudi Arabia that provides opportunity for all. Our Vision is a tolerant country with Islam as its constitution and moderation as its method. We will welcome qualified individuals from all over the world and will respect those who have come to join our journey and our success.” – CROWN PRINCE MOHAMMED BIN SALMAN.

For each of the three pillars of Vision 2030, the Kingdom has outlined 18 significant goals to be achieved by the year 2030. Consider these key goals as a Business looking to relocate employees to the Kingdom; 

• Increase foreign-direct investment from 3.8 per cent of GDP to the international average of 5.7 per cent of GDP 
• Rank Saudi Arabia among the Top 15 largest economies in the world, moving up from its current position of 19th 
• Increase women’s participation in the workforce from 22 per cent to 30 per cent.
  
• Lower the rate of unemployment from 11.6 per cent to 7 per cent.
  
• Increase contributions of small and medium enterprises from 20 per cent to 35 per cent of GDP.
  

• Key Pillars for Businesses

International corporations eyeing the Saudi market must align their strategies with Vision 2030’s objectives. From boosting foreign direct investment to increasing women’s workforce participation, these goals are pivotal in the corporate strategic blueprint. 

• Talent Implications

For foreign employees, Vision 2030 signals a nation ready to embrace diversity and innovation. The environment is ripe for professionals seeking growth in a nation blending tradition with modernity. 

The Intersection of Opportunity and Compliance 

Relocating to or sending talent to Saudi Arabia is an intricate dance between seizing opportunities and ensuring compliance. The evolving landscape of tax, immigration, and employment law is a testament to a nation in transformation, offering unprecedented opportunities whilst demanding adherence to its legal and cultural tenets. 

For businesses and professionals eyeing the Kingdom, understanding these nuances is not just essential – it’s foundational to thriving in a land where opportunities are as vast as the desert sands and where every grain is a potential seed of unprecedented growth. 

Ready to make the leap into the Kingdom of Saudi Arabia? Contact Centuro Global today. Let our all-in-one tailored solutions and expert insights be your compass in this journey, ensuring that every step taken is compliant, informed, and strategic. 

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