GOSI in the Payroll Run: The Two Shares and the Accounting Entry

The contribution to the General Organization for Social Insurance (GOSI) is not a single line in the payroll run, but two shares with two different accounting treatments: a share deducted from the employee, and a share borne by the establishment.

Conflating them distorts the payroll accounting entry, because the two shares meet in one account and part company in another.

1. Two shares, not one

• The employee’s share: withheld from their entitlements, so it is part of their wage rather than an additional cost on the establishment. The establishment holds it in order to remit it.
• The establishment’s share: borne by the establishment on top of the wage, so it is an additional cost that does not appear in the net the employee receives.

From here comes the rule the whole entry rests on: the two shares together are a liability, and the establishment’s share alone is an expense.

2. Why the liability differs from the expense

The liability account represents what the establishment must remit to GOSI. This amount includes both shares, because the establishment is the one that remits the contribution in full, including what it withheld from the employee.

The expense account, on the other hand, represents what the establishment actually bore. The employee’s share is not a cost on it, because it is part of their wage in the first place, and the wage was recorded in full in the payroll expense.

Had the employee’s share been brought into the expense a second time, it would have been recorded twice: once within the wage, and once as social insurance. That is the error this distinction prevents.

3. The payroll-run recognition entry

On recognising the payroll run, the contribution is distributed across the two accounts as follows:

• The liability account carries the establishment’s share and the employee’s share together.
• The expense account carries the establishment’s share alone.

So the difference between the two figures is exactly the employee’s share, which is the amount that moved from their entitlements into the liability without passing through the expense.

An illustration of the distribution of the two shares

Assumed inputs (the example’s own figures, not a statutory rule): a Saudi employee subject to the existing system, with a contribution wage of SAR 10,000.

What the rule says: under the existing system, the employee’s share is 9.75% and the establishment’s share is 11.75%. The liability account carries both shares, and the expense account carries the establishment’s share alone.

Application: the employee’s share is SAR 975, and the establishment’s share is SAR 1,175. So the liability account carries SAR 2,150, and the expense account carries SAR 1,175.

The difference between them is SAR 975, which is exactly the employee’s share. If the two figures appear equal in a Saudi employee’s entry, that is an indication that the two shares were combined in the expense.

4. The settlement entry

On remitting the contribution, a separate entry is recorded moving the amount from the liability account to the bank or the treasury.

This entry does not touch the expense, because the expense was recognised in the payroll-run entry. So settlement is a discharge of the liability, not a new cost.

It follows that the balance of the liability account at any moment represents what has accrued and not yet been remitted, and that is a figure fit to serve as a monitoring indicator.

What the liability balance says

The liability account is an account that moves in two directions every month: it increases on recognising the payroll run by the amount of the two shares, and it decreases on settlement by the amount remitted.

It follows that its balance carries a defined meaning: what has accrued and not been remitted. A balance approaching zero after each settlement is the expected position, and a balance accumulating month after month is a sign that settlement is behind the accrual or that an entry was not recorded.

This is one of the few cases where the balance of a single account is a direct operational indicator, rather than a figure read at the year end.

5. Non-Saudi workers: a single share

Under the existing system, the employer pays 2% occupational hazards only for a non-Saudi worker, there is no SANED contribution, and nothing is deducted from the employee.

What follows in the entry is that the two shares become a single share: there is no difference between the liability amount and the expense amount in this case, because there is no employee share to withhold.

It further follows that the check mentioned above, comparing total expense with total liability, needs a distinction: equality in an establishment all of whose employees are non-Saudi is an expected position, and equality in an establishment that has Saudi employees is a sign of an error.

This is a further reason to record the employee’s nationality as a datum that enters the calculation, not merely as an identifying datum.

As for the position of non-Saudis under the M/273 system, this guide has not established it in any published source; refer to GOSI on that.

6. The system applies the rate you configured

This point deserves clarity: the accounting system computes the contribution on the basis of the rate configured in its settings, and that rate is adjustable.

What this means is that the system does not know of its own accord that the rate has changed, and it does not distinguish between an employee subject to the existing system and one subject to the M/273 system except by what has been configured for it.

On a matter where the rate rises on the first of July of each year through to 2028, this distinction is decisive: responsibility for updating the rate and verifying that it is correct stays with the establishment.

7. What the accounting system does not do

Computing the contribution and recording its accounting entry is one thing, and dealing with GOSI as an authority is another. The accounting system:

• Computes the employee’s share and the establishment’s share for payroll accounting purposes.
• Records the liability and the expense, and records the settlement entry.
• Issues payslips.

As for registering with GOSI, uploading files to it, and updating subscribers’ data, these take place with the authority itself through its own channels, not from inside the general ledger.

The distinction between them matters when assessing any system: the question is not “does it calculate social insurance?” but “what exactly does it do, and what remains a procedure outside it?”

This distinction serves the establishment before it serves the vendor: an establishment that assumes its system handles the procedure with the authority leaves a gap nobody fills, and finds itself late. An establishment that knows the limits of its system assigns the external procedure an owner and a deadline.

It follows that the most useful thing to write into an establishment’s procedures here is not a description of what the system does, but a statement of what falls outside it and who handles it.

8. What this guide does not address

• Account names and the chart of accounts in a particular establishment, since that varies with the chart of accounts adopted.
• The treatment of differences and adjustments between what accrued and what was remitted. On that, refer to the accounting treatment adopted by the establishment.
• The position of non-Saudis under the M/273 system, as set out above.
• Remittance deadlines and the penalties for being late with them. It is not sound to state a figure; refer to GOSI on that.

9. What your system should record

• The employee’s share and the establishment’s share separately for every employee, not a single amount.
• The computed contribution wage the rate was applied to.
• The rate applied and its effective date, because it is adjustable and does not change of its own accord.
• The system applied to each employee: the existing one or M/273.
• The employee’s nationality, because the treatment differs under the existing system.
• The balance of the liability account, what has been remitted from it, and the date.

10. A checklist on the entry

• Does the liability account carry both shares together?
• Does the expense account carry the establishment’s share alone?
• Does the difference between the two figures equal the total of the employees’ shares?
• Does the settlement entry move the amount from the liability to the bank without touching the expense?
• Does the entry reflect that nothing is withheld from a non-Saudi employee?
• Has the configured rate been reviewed since the last first of July?

11. Why this turns into a problem

A wrong entry in this area does not throw the trial balance out, because it is balanced either way. Bringing the employee’s share into the expense increases the expense and increases what offsets it, and the entry stays balanced and wrong at the same time.

This is a property that distinguishes classification errors from numerical errors: an error in a figure breaks the balance and so gets noticed, and an error in the account that receives the figure stays balanced and so passes. The second is longer-lived for that reason alone.

For that reason it is not caught by the usual arithmetical review, but by a question about meaning: is the payroll cost presented what the establishment actually bore? The answer is wrong by the amount of all the employees’ shares, which is not a small amount.

One structure prevents that: that the two shares are kept separate from the moment of computation, rather than combined and then separated at the entry.

Added to that, the effect of this error does not stop at the cost report: the cost of a single employee enters into service pricing, into departmental budgets, and into any comparison between the cost of hiring and its alternatives. A figure inflated by the amount of the employees’ shares carries over into decisions well beyond the financial statements.

The check that reveals it is simple and needs no system: compare total expense with total liability for a single month. If they are equal and the establishment has Saudi employees, that is a sign that the two shares were not separated across the two accounts.

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, see The two parallel systems at GOSI. For the contribution wage and its two limits, see The contribution wage at GOSI.

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

Frequently asked questions

How is the GOSI contribution recorded in the payroll run?

The liability account carries the establishment’s share and the employee’s share together, because the establishment remits the contribution in full. The expense account carries the establishment’s share alone, because the employee’s share is part of their wage and was recorded within the payroll expense.

Why does the employee’s share not go into the expense?

Because it is not an additional cost on the establishment, but a withholding from a wage that was recorded in full in the payroll expense. Bringing it into the expense a second time records it twice.

What is the entry for settling the contribution?

An entry moving the amount from the liability account to the bank or the treasury. It does not touch the expense, because the expense was recognised when the payroll run was recognised.

How does the entry differ for a non-Saudi employee?

Under the existing system, nothing is withheld from a non-Saudi employee, and the employer pays 2% occupational hazards only with no SANED contribution. So the liability amount and the expense amount are equal in this case.

Does the accounting system update the GOSI rate automatically?

Systems compute the contribution on the basis of the rate configured in their settings, and that rate is adjustable. So responsibility for updating the rate and verifying that it is correct stays with the establishment, and it is a matter with a known date, because the M/273 system’s rate rises on the first of July through to 2028.

Does the accounting system handle registration with GOSI?

Computing the contribution and recording its accounting entry is one thing; registering with GOSI and uploading files to it is another, and it takes place with the authority itself through its own channels.

References

This guide is based on the accounting treatment of GOSI contributions in payroll accounting, and on what GOSI publishes regarding the treatment of non-Saudi workers under the existing system.

It is written on the basis of what is in force in September 2026. The contribution rates and their stepping, and the contribution wage and its two limits, have two separate places of their own.

This guide is a regulatory explanation, not legal or accounting advice. In a particular case, GOSI and the accounting treatment adopted by the establishment remain the reference.