Expat levy: a definition
The expat levy (المقابل المالي للعمالة الوافدة), also called the Saudi expat levy or the expatriate levy, is a periodic amount due from an establishment in respect of its expatriate workers (العمالة الوافدة). It is set by decisions of the Council of Ministers outside the text of the Saudi Labor Law (نظام العمل). The Ministry of Finance cites Council of Ministers Decision No. 197 dated 23/3/1438H as the decision that amended what each establishment pays in respect of its expatriate workers who match or exceed the number of its Saudi workers. In the sources we reviewed, we found no provision on the levy in the Labor Law or in its Implementing Regulation (اللائحة التنفيذية).
We state no amount for the expat levy, no schedule of payments, no exemption and no date on which it was last changed. The reason lies in how the levy is set rather than in caution: its amount changes by decision, a figure that was correct for one period is no evidence of the figure for the next, and a figure published without naming the instrument that sets it cannot be checked against the rule in force. The figure for any period is taken from the instrument in force on the date the levy falls due, and from the authority that issues it, not from a glossary definition.
What the sources do establish is where the expat levy stands in relation to the Labor Law, and in particular in relation to the article that allocates the costs of employing a worker who is not a Saudi national.
The expat levy and Article 40 of the Labor Law
Article 40 of the Labor Law sets out which party bears which cost in respect of a worker who is not a Saudi national. Its first paragraph places the following on the employer:
- the recruitment fees for the worker;
- the fees for the residence permit (iqama) and the work permit, and for their renewal;
- the fines arising from delay in these, where the employer caused them;
- the fees for a change of profession;
- the fees for exit and return (الخروج والعودة);
- the worker’s ticket home once the relationship between the parties has ended.
The expat levy is not on that list. Paragraph 1 of Article 40 of the Labor Law names particular fees, and the levy is not one of them. A reading of Article 40 of the Labor Law that treats it as deciding who bears the levy gives the text a meaning it does not carry. In the sources we reviewed, we found no provision that settles the question in either direction: the article does not place the levy on the employer, and it does not place it on the worker.
The rest of Article 40 of the Labor Law does not name the levy either.
A qualifier in paragraph 1 of Article 40 of the Labor Law can be lost in a summary. The fines it places on the employer are not every fine connected with the residence permit and the work permit, but those the employer has caused. The qualifier is part of the rule, not an addition to it, so shortening the item to a statement that the employer pays the fines changes what the provision says. The work permit fee that the Ministry publishes, and the window for renewing the permit, are set out in our guide to renewing the work permit for expat workers.
What the expat levy is not inferred from
- The Saudization ratio. It is not a basis for the levy. The Nitaqat programme places an establishment in a band according to its Saudization ratio. A band is a classification, with services granted or withheld according to it, not a financial liability, and an establishment’s band is not an amount it owes.
- The Ajeer rules. They do not settle the levy either. Ministerial Decision No. 60339, which governs the outsourcing of services by workers who are not Saudi nationals between establishments through the Ajeer programme (أجير), provides that such workers registered on the service contract do not affect the Nitaqat band of the beneficiary establishments. That is a rule about the band alone. We found nothing in the decision on the levy, so the rule is not extended to the levy, to registration with the General Organization for Social Insurance or to the number of work permits. The arrangement is examined under contingent workforce.
- Other uses of the word. The Arabic word مقابل, an amount given in return, appears in other senses, among them what one establishment pays another under a service contract between them. The expat levy is the amount due from an establishment in respect of an expatriate worker, not a payment the establishment makes to a service provider.
How the expat levy is recorded in the books
As an amount due from the establishment, the expat levy is recorded as an operating cost of the establishment. It is not a payment to the worker, and it is not part of the worker’s wage. That separation is the core of its accounting treatment. Who pays the levy to the government is a different question from whether the employer may recover it from the worker, and in the sources we reviewed, we found nothing that settles the second.
Three consequences follow. The levy does not pass through the payroll run. It is not part of the actual wage (الأجر الفعلي), which Article 2 of the Labor Law defines as the basic wage plus the other increases established for the worker in return for effort expended in the work, for risks incurred in performing it, or for the work under the contract or the establishment’s work regulation (لائحة تنظيم العمل); the levy is not an amount established for the worker. And it has no effect on the base for the end of service award: Article 84 of the Labor Law computes the award on the worker’s last wage, which Article 2 of the Labor Law reads as the actual wage, as set out under end of service calculation. Entering the levy in the payroll run records a cost of the establishment as an entitlement of the worker.
The amount of the levy, its due date and the consequence of paying it late come from the instrument in force and from the authority competent for it. In the sources we reviewed, we found no provision on any of the three in the Labor Law or in its Implementing Regulation, and we state none of them.
Statutory sources for the expat levy definition
The provisions relied on are those of the Saudi Labor Law as published by the Ministry of Human Resources and Social Development: Article 2 (the definition of the actual wage, and the reading of an unqualified wage as the actual wage), Article 40 (the costs it places on the parties, none of which is the levy) and Article 84 (the end of service award on the last wage). Royal Decree M/44 of 1446H, in force since 19 February 2025, amended Article 40 of the Labor Law. That decree did not amend Article 84 of the Labor Law. The Ajeer rule is taken from Ministerial Decision No. 60339. The instrument named for the levy, Council of Ministers Decision No. 197 dated 23/3/1438H, is taken from the Ministry of Finance’s description of it, and no amount from that decision is stated. Where a figure is needed, the reference is the instrument in force on the date the levy falls due.
This is an explanation of the concept and of the statutory provisions cited, not legal advice.
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