The Kingdom of Saudi Arabia (KSA) is the largest Arab state with a 2016 population count of approximately 31.8 million people, including about 11.7 million foreigners. To attract foreign investors, the government established the Saudi Arabian General Investment Authority to provide incentives. Of the 13.8 million employed persons in the country, only 3 million are local nationals, meaning that over 78% are foreign hires.
Iqama is used to manage foreign hires in KSA. An iqama, or a residence permit issued to expatriates who arrive in Saudi Arabia on an employment visa. Below, you’ll learn more about this permit, its background, and the application process.
What Is Iqama?
The KSA government is strict when it comes to immigration and labor policy compliance, particularly in the case of foreign employees. Before a non-Saudi national may work in KSA, the candidate requires a local sponsor. This is a local employer that will apply and secure the necessary work permit and residency card (Iqama), for the employee to work and stay in the country.
Foreign employees may be employed for only a fixed term corresponding to the duration of his or her work permit and Iqama. In the private sector, the validity of the work permit is currently limited to one year, with the need for renewal thereafter.
Iqama Application Process
The following outlines work authorization for a foreign employee in KSA:
- The sponsoring or local host company needs to apply for a Block Visa approval from the Ministry of Labor and Social Development (MLSD), if they do not already have one. Block visas are quotas issued by the MLSD that permit entities to sponsor foreign national employees for long-term work authorization. The Block Visa is granted based on the nationality of the applicant, country of origin, and the exact job role in relation to academic qualification.
- With approval of the Block Visa in hand, the sponsoring company must obtain a Visa Authorization number and Power of Attorney through the Ministry of Foreign Affairs in KSA.
- The above allows for the application of a work visa in the country of residence of the foreign employee, at the appropriate Saudi Diplomatic Mission. The application must be accompanied by a medical certificate of the candidate issued by an approved medical center.
- Upon approval of the work visa, the foreign employee can now enter KSA and start work. Within 90 days of arrival, an application for a work permit and Iqama must be submitted to MLSD.
- If the foreign employee needs to exit and re-enter KSA during the validity of their work permit and Iqama, an exit/re-entry permit must be obtained via the Ministry of Interior.
Saudization of Workforce
Saudi Vision 2030 is a plan to reduce Saudi Arabia’s dependence on oil, diversify its economy, develop public service sectors, and support small and medium enterprises. In line with that, the kingdom has been intensifying efforts to boost employment opportunities for Saudi nationals and increase the participation of Saudi women in the workforce.
The Ministry of Civil Service asked all ministries and government departments to get rid of all expatriate workers by 2020. Jobs at shopping malls, as well as sales activities in twelve retail categories are also restricted to Saudi nationals only.
Saudi law makes the employer liable for all fees associated with the work permit and Iqama of a foreign employee. The employer is also required to repatriation ticket fees if the employee ceases employment with the company.
As of June 2017, KSA instituted a new tax for foreign residents. The law does not define who should pay this fee. This means it is up to the employer if they will cover the cost. Since January 2018, the expat levy stands at SAR 400 per month per expat worker. This will increase to SAR 600 in 2019 and SAR 800 in 2020 for companies that hire a majority of foreign nationals.
Additionally, foreign workers with dependent families listed in their Iqamas are also required to pay a levy for each dependent upon renewal. This is based on the following rates:
- July 1, 2017: SAR 100 per month, per dependent
- July 1, 2018: SAR 200 per month, per dependent
- July 1, 2019: SAR 300 per month, per dependent
- July 1, 2020: SAR 400 per month, per dependent
The introduction this tax has already seen consequences. More than 94,000 expat workers left Saudi Arabia in the third quarter of 2017, although most are not from professional companies that tend to absorb the expat and dependents’ levy.
Work with an In-Country Partner
The overall immigration and work authorization process in the KSA can be time-consuming and complex. Depending on the nationality of the applicant, the proposed job title and the country from where the application is to be filed, it could take up to several months to complete.
If your organization is considering expanding into the Saudi market, but isn’t ready to commit to establishing an entity, Velocity Global’s International PEO (Professional Employer Organization) solution can have you up and running in KSA in as few as 48 hours. Want to learn more about how Velocity Global can accelerate your global expansion? We’re here when you’re ready to chat.