Saudi Arabia's Tax-Free Environment for Individuals
Personal income tax: Saudi Arabia does not impose income tax on individuals' employment income, investment income, or capital gains. This applies to both Saudi nationals and expatriates. There is no progressive income tax scale, no withholding on wages, and no annual individual income tax return. Social insurance: GOSI (General Organisation for Social Insurance) contributions are mandatory for employees. Expatriate contribution: 2% of gross salary (or higher for hazardous work). Saudi national employee: 9.75%; employer: additional contributions. VAT: Saudi Arabia imposes 15% VAT (introduced 2018, increased from 5% to 15% in 2020) on goods and services. VAT is a consumption tax — not an income tax. Withholding tax: Saudi Arabia applies withholding tax on payments to non-resident entities (not individuals) — 5%–20% on various categories (royalties, services, dividends from Saudi companies). This is a corporate/business tax matter, not personal income tax. Corporate Income Tax: 20% CIT on foreign entities' income from Saudi sources. Saudi nationals: subject to Zakat (2.5% on business income and net assets), not CIT. Mixed entities (Saudi/foreign ownership): Zakat on the Saudi portion, CIT on the foreign portion. No capital gains tax for individuals on shares, real estate, or other assets — a uniquely favourable environment for wealth accumulation.
End of Service Benefit (EOSB): Saudi Gratuity on Departure
The End of Service Benefit (EOSB — مكافأة نهاية الخدمة) is a mandatory severance/gratuity payment under Saudi Labour Law (Article 84). All employees working in Saudi Arabia (Saudi and expat) are entitled to EOSB on departure. Calculation: (1) If you resign (voluntary departure): entitled to EOSB if you worked for 2+ years. Entitlement: 1/3 of one month's salary for each of the first 5 years; 2/3 of one month's salary per year for years 5–10; full one month's salary for each year above 10. (2) If the employer terminates: full entitlement from day one of employment: 0.5 month's salary for each of first 5 years; 1 month's salary for each year above 5 years. Example: 5 years worked, resigned, final salary SAR 30,000/month: EOSB = (SAR 10,000 × 5 years × 1/3) ≈ SAR 50,000. Saudi EOSB tax in KSA: NOT subject to Saudi income tax — Saudi Arabia does not tax EOSB receipts. Destination country taxation: CRITICAL — the EOSB is taxable in most destination countries as employment income or retirement benefit. UK: EOSB taxable as emoluments (all earnings from employment); first £30,000 exemption may apply for termination payments, but only under specific conditions. USA: EOSB taxable on Form 1040 as foreign employment income. Australia: EOSB taxed as ordinary income (no concessional tax rate unless it qualifies as ETP — Employment Termination Payment — under ATO rules). Always plan for destination country tax on EOSB before departure.
GOSI (General Organisation for Social Insurance) for Expats
GOSI (المؤسسة العامة للتأمينات الاجتماعية) covers occupational hazards and workplace injury insurance for both Saudi nationals and expatriates. For expatriates: contribution: 2% of insured salary (employee + employer combined for occupational hazard branch). GOSI for expats covers: work injury (إصابة العمل) and occupational disease compensation only. Expats do NOT contribute to or benefit from the retirement and social insurance branches (التقاعد والتأمينات) — these are only for Saudi nationals. Saudi GOSI pension: Saudi nationals contribute at 22% of salary (employee 9.75% + employer 12.25%) to the retirement branch — building a Saudi state pension. Expat GOSI refund on departure: For occupational hazard contributions — the employer bears most of this contribution; there is no individual expat GOSI balance to 'withdraw' in the same way as EPF (Malaysia) or BHXH (Vietnam). There is no accumulated individual expat retirement account in GOSI. Expats do not receive a GOSI refund on departure in the conventional sense. If there were any GOSI administrative errors or overpayments: the employer must rectify these at end of contract. Saudi GOSI certificate: on departure, some destination countries' pension authorities require a GOSI certificate of contributions to confirm which social security system applied — obtain from your Saudi employer or GOSI directly.
Iqama Cancellation and Departure Procedures
Iqama (إقامة — Residency Permit): the formal Saudi residency documentation for all expatriates. Cancellation: your employer (the Kafeel — sponsor under the old Kafala system, now transitioning to the new Saudi labour reform) cancels the Iqama through the Absher portal (Saudi government digital platform). Steps: (1) Employer submits Iqama cancellation on Absher — the employee receives an Exit Visa (or Final Exit Visa). (2) Exit visa types: Single Exit Visa (السفر للخارج) for temporary departure; Final Exit Visa (الخروج النهائي) for permanent departure and Iqama cancellation. (3) Final Exit Visa: once issued and used to depart, the Iqama is permanently cancelled. You cannot re-enter Saudi Arabia on the same Iqama. (4) Clearances required before Iqama cancellation: no outstanding debt with employer; no outstanding loans with Saudi banks; no criminal cases pending (Kharooj Nehai — clearance from courts); no traffic fines or government fines. Absher digital check: the Absher portal aggregates outstanding obligations — resolve all before requesting cancellation. Saudi Premium Residency (الإقامة المميزة — Saudi Green Card): holders of Saudi Premium Residency have different exit rules — they can depart and re-enter Saudi Arabia without Kafeel sponsorship requirements. Premium Residency requires formal cancellation if permanently departing. ZATCA (Tax Authority): for employees (not business owners): no ZATCA filing required on departure. For business owners with CIT obligations: ZATCA clearance required.
Saudi Business Owners: Zakat and ZATCA on Departure
Zakat (زكاة): all Saudi-national-owned or Saudi company interests are subject to Zakat (2.5% on Zakatable base). Foreign shareholder portion: subject to CIT (20% corporate income tax) administered by ZATCA. ZATCA (Zakat, Tax and Customs Authority — هيئة الزكاة والضريبة والجمارك): administers Zakat, CIT, withholding tax, and VAT. For departing foreign investors with Saudi company interests: (1) File all outstanding Zakat/CIT returns with ZATCA. (2) Obtain a ZATCA tax clearance certificate (شهادة الإخلاء الضريبي) — required for: transferring Saudi company shares; dissolving a Saudi entity; exiting a business partnership. (3) VAT deregistration: if you operated a Saudi VAT-registered business, apply for VAT deregistration with ZATCA before or on the date of departure. (4) E-invoicing (FATOORAH): Saudi Arabia's phased e-invoicing system applies to VAT-registered entities. Ensure all outstanding invoicing obligations are met before deregistration. Transfer of Saudi company ownership: subject to SAGIA (Saudi Arabian General Investment Authority, now MISA — Ministry of Investment) approval for foreign-owned entities. The transfer process requires ZATCA clearance and MISA licensing updates. Saudi Stock Exchange (Tadawul) investments: non-resident investors can hold Saudi equities via the Qualified Foreign Investor (QFI) programme — you can retain Tadawul investments after departure. Capital gains on Saudi stocks: no Saudi CGT for individuals.