The Kingdom of Saudi Arabia is the largest Arab state and has, according to a 2016 population census , approximately 31.8 million inhabitants, of which 11.7 million are foreigners. In order to attract foreign investors, the government created a General Authority for Investments of Saudi Arabia in charge of putting in place incentive measures . Among the 13.8 million people employed in the country, only 3 million of them are Saudi citizens, which means that more than 78% are foreign recruitments. The iqama is the document used for the management of foreign recruitments in Saudi Arabia. An iqama, or residence permit, is a document issued to expatriates who arrive in Saudi Arabia on a work visa. Below, we tell you more about this permit, the context and the application procedure.
What is the iqama?
The Saudi government is strict on immigration and respect for labor laws, especially when it comes to foreign employees. Before being able to work in Saudi Arabia, a foreign candidate must obtain a local sponsor. This is a local employer who will take the steps to apply for a work permit and a residence permit (iqama), so that his employee can work and reside in the country. Foreign employees can only work for a fixed period that corresponds to the validity period of their work permit and iqama. In the private sector, the validity period of a work permit is currently limited to one year, renewable upon expiry if necessary.
Iqama Application Procedure
The steps to take to obtain a work permit for a foreign employee in Saudi Arabia are as follows:
- The sponsor or host company must apply for a group visa (Block visa) from the Ministry of Labor and Social Development, if it does not already have this visa. Group visas correspond to quotas issued by the Ministry of Labor and Social Development which authorizes entities that request it to sponsor foreign employees for long-term work authorization. The group visa is granted according to the nationality of the candidate, his country of origin and his exact professional role with regard to his diplomas.
- Once the group visa authorization has been obtained, the sponsoring company must obtain a visa authorization number and a power of attorney from the Ministry of Foreign Affairs in Saudi Arabia.
- This process makes it possible to apply for a work permit in the country of origin of the foreign employee at the competent Saudi diplomatic mission. This request must be accompanied by a medical certificate for the candidate, issued by an authorized medical centre.
- Once the work visa has been obtained, the foreign employee will be able to travel to Saudi Arabia and start working. Within 90 days of his arrival, he will have to apply for a work permit and iqama from the Ministry of Labor and Social Development.
- Any exit and re-entry into Saudi territory during the duration of the work permit and the iqama must be the subject of an application for an exit / re-entry permit from the Ministry of the Interior.
Saudiization of the workforce
Saudi Vision 2030 is a program that aims to reduce Saudi Arabia’s dependence on the oil industry, diversify its economy, develop public service sectors and support small and medium enterprises. Within this framework, the government has redoubled its efforts to encourage the employment of Saudi citizens and increase the percentage of Saudi women in the workforce. The Ministry of Civil Services has asked all ministries and state departments to get rid of all expatriate workers by 2020. Jobs in shopping malls , as well as in twelve categories of retail trade are reserved only for citizens Saudis.
Expatriate tax
Saudi law states that the employer must bear all costs associated with the work permit and iqama for a foreign employee. The employer must also bear the cost of a repatriation ticket if the employee ceases to work within the company. Since June 2017, Saudi Arabia has introduced a new tax for foreign residents. The law does not specify who must pay this tax. This means that the employer must decide whether or not he wants to pay for it. Since January 2018, the expatriate tax is SAR 400 per month per expatriate employee. This amount will increase to SAR 600 in 2019 and SAR 800 in 2020 for companies that mainly hire foreign citizens. Furthermore, foreign workers with a dependent family listed on their iqama must also pay a fee for each dependent upon renewal. The evolution of the amounts to be paid is as follows:
- July 1, 2017: SAR 100 per month per dependent
- August 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 of this tax is already having visible consequences. More than 94,000 expatriate workers left Saudi Arabia in the first quarter of 2017, most of them not employed by professional companies that paid expatriate and dependent taxes.
Work with a local partner
The procedures for work and residence permits in Saudi Arabia can be long and complex. Depending on the nationality of the candidate, the position offered and the country where the application must be submitted, a delay of several months may be expected. If your company is considering entering the Saudi market but is not ready to establish an entity there, Velocity Global’s Employer of Record solution can help you get up and running in Saudi Arabia in just 48 hours. hours. Want to learn more about how Velocity Global can accelerate your international development? We’ll be there to discuss it with you when you’re ready.
