IMPACT – MEDIUM
What is the change? Saudi Arabia will increase the monthly fees that companies pay for each foreign worker they employ, and companies that hire more Saudis than foreign workers will no longer be exempt from paying the fees. The current amount is 200 Saudi riyals (about US$53) per month per foreign employee.
What does the change mean? Beginning in January 2018, companies that employ an equal or fewer number of foreign nationals compared with Saudi citizens will pay 300 riyals per month for each foreign worker; 500 riyals per month in 2019 and 700 riyals per month in 2020. For companies that employ more foreign workers than Saudis, the fees will be 400 riyals per month in 2018, 600 riyals per month in 2019 and 800 riyals per month in 2020 for each foreign worker.
Background: The implementation schedule is as follows:
The fees are part of the government’s efforts to encourage companies to hire Saudi workers. The government also imposed a new tax on family members of expatriate workers in July and new Saudization rules on employers took effect Sept. 3.
BAL Analysis: Saudi employers should plan for the graduated fee hikes for foreign employees over the next three years and assess their ratios of foreign workers to Saudi workers to begin planning for a set of Saudization policies that will impact business costs and hiring and recruitment practices.
This alert has been provided by the BAL Global Practice group and our network provider located in Saudi Arabia. For additional information, please contact your BAL attorney.
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