Payroll Services KSA

Pre-payroll setup in KSA

What you need before you can pay employees:

Before you can pay anyone, you need to get the setup right. Start by registering your company with the Ministry of Investment and the Ministry of Commerce. These are the two main approvals that allow you to operate. Once you have your licences, open a corporate bank account with a Saudi bank. This account will be used to pay all employee salaries through the Wage Protection System.

Next, register with the Ministry of Human Resources. This gives you access to key government platforms like Qiwa for contract verification, Muqeem for Iqama management, GOSI for social insurance, and Mudad for payroll reporting. Each one connects to a different part of the process. Make sure every employment contract is uploaded and linked to the right visa. If the paperwork doesn’t match or something’s missing, the system will flag it and payroll can get blocked. Get the foundations in place early and you’ll avoid problems later.

GOSI contributions

Once the company is set up and your platforms are active, you’ll need to start making GOSI contributions. This forms part of your employee management and HR requirements. For Saudi nationals hired before July 2024, the rates are clear. Employers pay 11.75 percent. Employees pay 9.75 percent. That covers social insurance, retirement and unemployment. For expatriates, the only requirement is a 2 percent employer contribution for work injury insurance.

From July 2025, the rates begin to shift for newly registered Saudi employees. GOSI will introduce a phased increase in contributions, gradually raising the total amount until it reaches 22 percent by 2028. The exact rate will depend on the year the employee joins. This only applies to Saudis registered with GOSI after July 3, 2024.

End-of-service benefits

End-of-service benefits are a legal requirement in Saudi Arabia, and they can’t be left as an afterthought. Once an employee has completed two years, they’re entitled to a payout when they leave. The calculation is simple. For the first five years, it’s half a month’s salary for each year worked. After that, it’s a full month per year. The final amount is based on their last basic salary.

This can add up quickly, especially with long-serving staff. You don’t want to scramble for cash when someone resigns or retires. Set aside a provision each year and make sure it’s reflected in your books. That way, you’re covered when the time comes.

How to stay compliant

Even with the basics in place, payroll can go off track fast. One of the most common issues is missing the monthly WPS upload. If salaries aren’t reported through Mudad, the system will flag it. Delayed GOSI registration is another problem. It only takes a few days to fall behind, and catching up usually means backpay and penalties. Contracts that don’t match what’s actually paid also raise red flags, especially when the numbers in the system don’t line up. Visa status matters too—if an Iqama isn’t current, salary transfers can be blocked.

To stay clear of these issues, run regular checks. Make sure all records are up to date across every platform. Use software that links payroll to GOSI, WPS and Qiwa to avoid duplication. And avoid relying on manual input. Mistakes are easy to miss and hard to fix once the system catches them.

How can Sovereign PPG help?

Getting payroll right in Saudi Arabia takes more than following instructions, it takes local know-how and the right connections. Sovereign PPG understands the details that matter, from WPS registration and GOSI filings to linking contracts and visas across the right portals. We work closely with key authorities and take care of the full setup, including licensing, immigration and post-incorporation support.

If you need help with company formation, payroll compliance or ongoing PRO support in Saudi Arabia, the UAE, Oman or Qatar, call us in Saudi Arabia on +966 (0)535 377 578 or you can also email ksa@SovereignGroup.com or complete the form below and we’ll be in touch.