The Contribution Wage at GOSI: Components and the Lower and Upper Limits

The contribution rate at the General Organization for Social Insurance (GOSI) is only half the calculation. The other half is the contribution wage: the amount the rate is applied to. It is not gross salary, and it is not the net the employee receives.

It has two defined components, and two limits: a lower one and an upper one. The error in this area falls in the base, not in the rate.

The figures stated in this guide relate to the existing system at GOSI, as set out in section eight.

1. What goes into the contribution wage

Under the existing system, the contribution wage is made up of two elements:

• Basic salary
• Housing allowance, whether paid in cash or provided in kind

The second element is easy to overlook, because it enters the base even if it is not paid in cash. An establishment that provides housing for its employees instead of paying a cash allowance does not thereby fall outside the calculation.

2. What does not go in

Other allowances are excluded from the contribution wage, among them:

• Transport allowance
• Food allowance
• Bonuses

So the practical rule is that the base is not the sum of everything paid to the employee. Computing the contribution on gross salary brings excluded allowances into the base, and computing it on basic salary alone drops the housing allowance out of it wherever one exists.

Note that the excluded list is not a closed list whose count is to be memorised, but a description: everything other than basic salary and housing allowance. It follows that a new allowance appearing in the salary structure does not call for a search for its place in a list, but for a single question: is it a housing allowance?

That same question is what makes the naming of allowances in the system a matter with an effect on the calculation, not merely on classification. An allowance recorded under a generic name gives no way of knowing whether it is inside the base or outside it.

As for characterising a particular allowance, that is a matter to be referred to GOSI, as set out in the section on what this guide does not address.

3. The contribution wage is neither the salary nor the net

The confusion in this area arises from three figures that every payroll run carries:

• Gross salary: everything due to the employee in basic pay and allowances.
• Net received: what remains after deductions, among them the employee’s GOSI share.
• The contribution wage: the base the rate is applied to, being basic salary plus housing allowance within the two limits.

The third is what is wanted here, and it is usually lower than the first and higher than the second. Many errors arise from using one of the other two figures in its place.

The difference between the three is not a difference in naming: each figure has a different function. Gross is what the two parties agreed, net is what reaches the employee’s account, and the contribution wage is the only one the rate is applied to.

Once a system presents a single figure under the name “salary”, whoever computes the contribution has to infer which one is meant. The inference here shows its effect not in the payslip, but in the contribution amount alone.

Added to that, “wage” in the Labor Law is a term with its own definition and rules in its own places, and it is not necessarily the contribution wage at GOSI. As for the precise relationship between the two definitions, that is a matter to be referred to the statutory text and the competent authority.

4. The lower limit: SAR 1,500 per month

The contribution wage has a lower limit of SAR 1,500 per month.

What a lower limit means is that the base does not fall below it, even if the employee’s basic salary and housing allowance together come to less than that.

5. The upper limit: SAR 45,000 per month

The contribution wage also has an upper limit of SAR 45,000 per month.

What an upper limit means is that anything above this amount does not enter the base, however high the salary.

The two limits together make the relationship between salary and contribution non-linear: it is flat below the floor, proportional between them, and flat above the ceiling. It follows that a salary increase does not necessarily mean an increase in the contribution, and a decrease does not necessarily mean a decrease in it.

6. The floor as much as the ceiling

Both limits are laid down together, and a system that applies the ceiling but does not apply the floor remains wrong at the bottom of the range.

7. An illustration of the two limits’ effect

Assumed inputs (the example’s own figures, not a statutory rule): three employees subject to the existing system.

• The first: basic SAR 1,000, and no housing allowance.
• The second: basic SAR 8,000, housing allowance 2,000, and transport allowance 500.
• The third: basic SAR 40,000, and housing allowance 10,000.

What the rule says: the base is basic salary plus housing allowance, with a lower limit of 1,500 and an upper limit of 45,000, and transport allowance is excluded.

Application:

• The first: the total is 1,000, which is below the floor, so it is raised to 1,500.
• The second: the total is 10,000, and the transport allowance is outside the calculation, so the base is 10,000, not 10,500.
• The third: the total is 50,000, which is above the ceiling, so it is reduced to 45,000.

It is clear from the first case that the base may be higher than the sum of its components, which is not what someone treating the limits as ceilings only would expect.

Another point is clear from the second case: the difference between the correct base and the wrong one here is SAR 500 a month for a single employee, an amount that stops nobody in a payroll run. But it recurs every month and for every employee receiving a transport allowance, which makes it a cumulative difference in one direction.

The effect of that is cumulative: small in the single instance, regular in its recurrence.

8. The scope of these figures

The components of the base and its two limits set out above relate to the existing system at GOSI.

As for whether Royal Decree M/273 changed the contribution wage or its upper limit, that is a matter this guide has not established in any published source. The official guide issued by GOSI confines the increase to the pensions branch, but the absence of evidence of a change in the base is not evidence that there was none.

For that reason, it is not sound to publish the upper limit alongside the new system’s rates as being its base; refer to GOSI on that.

This is one of those matters where inference is easy: one might say that the rates alone changed, so the base remains. It is a reasonable inference, and a reasonable inference does not stand in place of a source.

Why this place deserves particular caution

The difference between “it did not change” and “we have not established anything showing it changed” is a difference in the source of the knowledge, not in the degree of confidence. The first is a statement about reality, and the second is a statement about the limits of what was examined.

An internal document that writes the first while meaning the second passes to its reader a certainty that was not built on a source. The effect of that appears later: whoever reads the document does not know the figure was an estimate, so they do not verify it again.

For that reason, the formulation adopted here is to refrain from asserting in either direction, rather than to prefer one of them.

9. What this guide does not address

• The contribution base under the M/273 system and its upper limit, as set out above.
• Characterising a particular allowance and whether it is part of the housing allowance or of the excluded allowances. Refer to GOSI on that.
• Valuing housing provided in kind. Refer to GOSI on that.
• The treatment of variable wages or commission-based pay in the base. Refer to GOSI on that.
• Amending the two limits and the effective dates of any amendment to them. Refer to GOSI on that.

10. What your system should record

• Basic salary separately from allowances, not as a single combined amount.
• Housing allowance as an independent field, because it is the second component of the base.
• Housing provided in kind, because it enters the base even if it is not paid in cash.
• Other allowances classified, so that they can be excluded from the calculation.
• The computed contribution wage for every employee, not just the salary.
• The application of the two limits: which employees had their base raised to the floor, and which had it reduced to the ceiling.

11. Checklist

• Does the system compute the base from basic salary plus housing allowance, rather than from gross or from basic alone?
• Does housing provided in kind enter the calculation?
• Are transport allowance, food allowance and bonuses excluded?
• Does the system apply the floor as it applies the ceiling?
• Are there employees whose base is below SAR 1,500?
• Is the upper limit shown in any document alongside the new system’s rates?

12. Why this turns into a problem

An error in the base differs from an error in the rate in one property: the rate is a single figure reviewed once, and the base is computed for every employee separately every month. The first is corrected by changing a setting, and the second needs a data structure that was correct in the first place.

That structure is settled when the employee is entered, not when the contribution is computed: if the salary goes in as a single combined figure, there is afterwards no way to separate basic from housing allowance from transport allowance except by going back to the contract.

For that reason the practical question is not “is the rate correct?” but: are the salary components separated in the system? If they are separated, the base becomes a result that is computed; if they are not, it becomes an estimate that is reviewed by hand.

This is where it pays to have an employee’s facts in a single file. That is what Qoyod HR provides: a single employee file holding the contract, the documents and their expiry dates with an alert before them, an attendance record for each employee, and their leave, salary and end-of-service entitlements. End-of-service, overtime and leave-balance calculations are built into the system. It is a standalone HR system with its own subscription, and the link with Qoyod accounting is available now.

For the contribution rates and their step table, see The two parallel systems at GOSI. For the accounting entry for the two shares, see GOSI in the payroll run.

For more guides and templates, browse the HR Resource Centre.

Frequently asked questions

What is the contribution wage at GOSI?

Under the existing system, it is basic salary plus housing allowance, whether paid in cash or provided in kind. Other allowances such as transport, food and bonuses are excluded from it.

Does the transport allowance go into the contribution wage?

No. The transport allowance is one of the excluded allowances, as are the food allowance and bonuses.

What are the lower and upper limits of the contribution wage?

The lower limit is SAR 1,500 per month and the upper limit is SAR 45,000 per month, under the existing system.

What if the employee’s salary is below the lower limit?

The base does not fall below SAR 1,500 per month; a system that applies the ceiling but does not apply the floor remains wrong at the bottom of the range.

Does housing provided in kind go into the calculation?

Yes. The housing allowance enters the contribution wage whether it is paid in cash or provided in kind.

Do these limits apply to the M/273 system?

What is stated here relates to the existing system. As for whether M/273 changed the contribution wage or its upper limit, that is a matter this guide has not established in any published source, it is not sound to publish the upper limit alongside the new system’s rates as being its base, and you should refer to GOSI on that.

References

This guide is based on the frequently asked questions published by GOSI regarding the components of the contribution wage and its two limits, with the upper limit corroborated by an international tax summary.

It is written on the basis of what is in force in September 2026 as regards the existing system. The contribution rates and their stepping under the M/273 system have their own separate place.

This guide is a regulatory explanation, not legal or accounting advice. In a particular case, GOSI remains the reference.