How can an Umbrella Company Help with Contracting in Saudi Arabia?
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Saudi Arabia. Even better, most are experts in Saudi Arabia and expat tax law, meaning they’ll also help you optimise your earnings in Saudi Arabia.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Can I Organise My Taxes and Work Permit Myself?
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Saudi Arabia.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Saudi Arabia, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Saudi Arabia and your home country can seem like full-time work in itself.
A Contractor’s Guide to Taxes in Saudi Arabia
One of the most consistently challenging aspects of contracting in Saudi Arabia is complying with the country’s tax system given that there is no personal income tax for employment income in Saudi Arabia but there is a wide range of taxation policies applying to non-employment which depend on your residency status.
How do I calculate my taxable income in Saudi Arabia
Do you know much about Saudi Arabian Tax Law? Does Saudi Arabia have a tax treaty with your home country? You will need to find out or find someone who can help! There is no income tax on employment income in Saudi Arabia but non-employment income is subject to tax as an entity or permanent establishment, so you need to be sure that you’ve been taxed correctly.
Tax Filing as a Contractor in Saudi Arabia
| When Do You Need to Lodge Your Tax Return? | No personal income tax scheme in Saudi Arabia but a resident self-employed foreign professional or a resident foreign individual carrying on business activity in Saudi Arabia must file a tax return and pay the tax due within 120 days after tax-year end. |
| Tax Filing Deadline | 120 days after tax year end. |
| Can you file it online? | Yes, https://login.gazt.gov.sa/irj/portal?ume.logon.locale=ar&login=X |
How to File Taxes in Saudi Arabia as a Contractor
There is no personal income tax (employment tax) in Saudi Arabia. However, non-residents conducting business activity or deriving income from a permanent establishment in Saudi Arabia will be taxed as a ‘corporation’. To file taxes as a corporation, the following steps apply:
Step 1: Register(link is external) as a new user for the Saudi Arabian Tax & Income Department portal.
Step 2: Login to your taxpayer account here(link is external), using the username and password that you created.
Step 3: Select ‘Tax return service’.
Step 4: File the tax return using form No. 4.
Step 5: Attach the supporting documents required.
Step 6: Review and acknowledge the authenticity and accuracy of the information provided. Click ‘submit’. You will then receive a delivery acknowledge notice and invoice number.
Step 7: Pay any tax due within 120 days of the end of the tax year.
General Authority of Tax and Income: https://www.gazt.gov.sa/ar(link is external)
Tax Figures in Saudi Arabia
| Currency | Saudi Arabian Riyal (SAR) |
| Tax-free Threshold in Saudi Arabia | No personal income tax scheme in Saudi Arabia. |
| Notes | Saudi Arabians and nationals of other Gulf Cooperation Non-Saudi and non-resident GCC nationals and entities with a permanent establishment in Saudi Arabia are subject to flat income tax rate of 20% on their business income in Saudi Arabia. Non-residents who do not have a legal registration or a permanent establishment in Saudi Arabia are subject to withholding tax on their Saudi Arabia sourced income. This rates for WHT are: 20% for management fees. |
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Tax Residency in Saudi Arabia
When do you become a tax resident in Saudi Arabia
You become a tax resident in Saudi Arabia when:
An individual is considered a resident in Saudi Arabia for a taxable year if:
One has a permanent place of residence in Saudi Arabia and resides in Saudi Arabia for a total period of not less than 30 days in the taxable year.
One resides in Saudi Arabia for a period of not less than 183 days in the taxable year.
Does the 183 day rule apply in Saudi Arabia
Yes
Am I taxed on my global income in Saudi Arabia
Residents and non-residents of Saudi Arabia are subject to tax on worldwide income depending on the tax treaty that Saudi Arabia has with that foreign country.
Can you set up your own Limited Company in Saudi Arabia?
| How long does it take to set up | 17 days |
| How much does it cost | SAR 5250 |
| Is it easy? | Starting a Business Rank: 135 (Source: World Bank) |
Tax Calculator in Saudi Arabia
If you are a contractor and want a calculation on your tax and net retention in Saudi Arabia, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax in Saudi Arabia
Contractors in Saudi Arabia are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Saudi Arabian umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Saudi Arabian taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Saudi Arabian tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax in Saudi Arabia
We work with numerous umbrella companies in Saudi Arabia, many of whom are experts in tax and immigration laws. If you have any questions about tax in Saudi Arabia, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Saudi Arabian work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Saudi Arabia but without the overhead of directly dealing with the Saudi Arabian tax authorities. Get in touch with us today for some reliable advice on tax in Saudi Arabia!
A Contractor’s Guide to Work Permits in Saudi Arabia
Immigration is one of the primary concerns for any contractor hoping to start working in Saudi Arabia. Permanent employees will find it easy to get their Saudi Arabian work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer. This sponsorship system is termed “kafeel” in Saud Arabia.
The Saudi Arabian work permit, is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in Saudi Arabia is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
How Does an Umbrella Company Work?
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Saudi Arabia (which means avoiding fees, fines, or even worse penalties).
How Can We Help You?
There’s a huge variety of Umbrella Companies with different specialities and advantages in Saudi Arabia. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout Saudi Arabia and match contractors with the right company for them. If you’ve already secured a contract in Saudi Arabia, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).
