Two factories sit on the same street in Dammam. Each employs 50 expatriate workers. One holds a valid Industrial License; the other operates on a commercial registration. Since 17 December 2025, the first pays SAR 0 in expat levy. The second pays up to SAR 480,000 a year — SAR 800 per worker, per month.
The “financial counterpart” (المقابل المالي) is the monthly fee every Saudi employer pays per expatriate work permit. It is the largest recurring labour cost after salary for most expat-heavy businesses — and in the last two years, the map of who pays it has been redrawn twice.
The two bands: SAR 700 or SAR 800
The levy has exactly two rates, and which one applies depends on a single comparison inside your establishment:
| Your workforce | Levy per expat, per month | Per expat, per year |
|---|---|---|
| Expats ≤ Saudis | SAR 700 | SAR 8,400 |
| Expats > Saudis | SAR 800 | SAR 9,600 |
The comparison is establishment-wide, and the rate applies to every expat permit — not just the marginal ones. That produces the mechanic most employers miss: if 8 expats work alongside 2 Saudis, all 8 permits bill at SAR 800. Reach parity and all 8 drop to SAR 700 — a saving of SAR 1,200 per expat per year, on top of any Nitaqat band improvement.
The Saudi headcount is weighted using the official Nitaqat counting rules, not raw numbers: a Saudi employee earning SAR 3,000–3,999 per month counts as half a worker, one earning below SAR 3,000 does not count at all, and a Saudi employee with a disability earning at least SAR 4,000 counts as four. A single hire can flip the rate for the entire establishment. Our KSA Expat Levy Calculator computes the flip point and the break-even salary for the extra Saudi hires.
The legal framework
| Instrument | What it establishes |
|---|---|
| Council of Ministers — Fiscal Balance Program (December 2016) | Created the expat levy and its 2018→2020 ramp, alongside the dependent fee |
| Labor Law (Royal Decree M/51), Article 40(1) | Recruitment fees, iqama issuance and renewal, work permit fees, delay fines, profession-change fees, exit/re-entry visas and the final return ticket are borne by the employer |
| Council of Ministers decision, 20 February 2024 | Extended the small-enterprise exemption (2–4 expats free of levy) for three years |
| Cabinet decision, 17 December 2025 | Permanently cancelled the levy for establishments holding a valid Industrial License |
The Labor Law’s official translation is published by the Bureau of Experts (laws.boe.gov.sa); administrative guidance sits with the Ministry of Human Resources and Social Development.
Where the fee came from
The levy is the endpoint of the Fiscal Balance Program approved by the Council of Ministers in December 2016, which phased the rates in over three years:
| From | Expats ≤ Saudis | Expats > Saudis |
|---|---|---|
| Jan 2018 | SAR 300 | SAR 400 |
| Jan 2019 | SAR 500 | SAR 600 |
| Jan 2020 — today | SAR 700 | SAR 800 |
The rates have been flat since January 2020. What keeps changing is who is exempt.
Exemption 1: Industrial licenses — now permanent
From 1 October 2019 the state covered the incremental levy for industrial facilities under a temporary support programme, extended repeatedly and due to expire on 31 December 2025. On 17 December 2025 the Cabinet replaced the waiver with a permanent cancellation of the expat levy for establishments holding a valid Industrial License.
- Applies to all expat workers of the licensed industrial establishment.
- Does not apply to commercial, retail or service businesses — including those serving the same industrial supply chain without their own license.
- No expiry date: this is a Vision 2030 manufacturing incentive, not another extension.
Between 2019 and end-2024 — the waiver years — the number of industrial facilities grew from 8,822 to more than 12,000 and industrial employment rose 74%, which is the stated rationale for making the exemption permanent.
Exemption 2: Small businesses — 2 to 4 free expats until early 2027
On 20 February 2024 the Council of Ministers extended the small-enterprise exemption for three more years. The mechanics, as clarified by HRSD:
| Condition | Expats exempt from the levy |
|---|---|
| ≤9 employees total (incl. owner), owner works in the business and is GOSI-registered | 2 |
| Same, plus at least one Saudi employee (non-owner) dedicated and GOSI-registered | 4 |
Everything above the free allocation bills at the normal band rate. The three-year extension approved in February 2024 runs into early 2027 — the ministry has not published a Gregorian end date, so small employers should budget for the full rate from January 2027 to be safe.
What the levy is not
Three fees get conflated with the levy in almost every forum thread:
| Fee | Amount | Who pays |
|---|---|---|
| Expat levy (financial counterpart) | SAR 700–800/month per expat | Employer |
| Dependent fee (المقابل المالي للمرافقين) | SAR 400/month per dependent | Worker (sponsor) |
| Work permit license fee | SAR 100/year per expat | Employer |
| Iqama issuance/renewal | SAR 650/year per expat | Employer |
The levy is paid through SADAD when issuing or renewing the work permit, in blocks of 3, 6, 9 or 12 months — so a cash-flow spike of SAR 2,400 per worker per quarter at the high band is normal, not an error.
Can my employer deduct the SAR 800 from my salary?
No. Article 40(1) of the Labor Law puts recruitment fees, work permit fees, iqama issuance and renewal, and the fines resulting from their delay on the employer. Deducting the levy from an expat’s wages violates the Labor Law and exposes the employer to penalties — yet it remains one of the most common grievances raised by workers in the Kingdom. If it is happening to you, the deduction will be visible against your contract wage in your payslips, and the Wage Protection System record is itself evidence in an MHRSD complaint.
The dependent fee (SAR 400/month per dependent, in force at that level since July 2020) is different: it is legally the sponsor’s — the worker’s — cost, and employers are not required to cover it. Estimate that side with our KSA Dependent Fee Calculator.
What this costs a real company
A trading company with 8 expats and 2 Saudis, no exemptions:
- Levy: 8 × SAR 800 × 12 = SAR 76,800/year
- Work permit licenses: 8 × SAR 100 = SAR 800/year
- Iqama renewals: 8 × SAR 650 = SAR 5,200/year
- Total: SAR 82,800/year — before salaries.
Hiring 6 Saudis to reach parity drops every permit to SAR 700 and saves SAR 9,600/year in levy alone — the calculator shows the months to break even against the new salaries, and your Nitaqat band improves alongside.
Frequently asked questions
Does the exemption cover a factory’s sales office? The December 2025 cancellation attaches to the establishment holding the valid Industrial License. Activities operating under a separate commercial registration — even in the same group — remain billable at the standard bands.
We are 9 people including the owner. Do we qualify for the small-business exemption? Yes, if the owner actually works in the business and is GOSI-registered — that exempts 2 expats. Adding one GOSI-registered Saudi employee lifts it to 4. At 10 total employees the exemption is lost entirely.
Is the levy the same as the SAR 400 dependent fee? No. The levy is the employer’s cost per work permit. The dependent fee is charged per family member on the worker’s iqama and is the sponsor’s cost. They were both created by the Fiscal Balance Program but bill different people.
Run your own headcount through the KSA Expat Levy Calculator to see your annual exposure, your flip point, and what the December 2025 industrial exemption or the small-business allocation is worth to you.