For a team of five or fewer, Saudisation means one Saudi employee. From the sixth head the Nitaqat formula engages, and an IT solutions entity needs about 31 percent Saudi staff to stay out of the red band. The expensive part is not the quota. It is the sixth hire.

That is the whole shape of the problem, and almost nobody states it that way. The advice a European software company gets about Saudisation is usually a percentage looked up from a grid of company sizes. That grid was abolished on 1 December 2021. What replaced it is a published equation, and the equation behaves very differently at five people than at six.

Figures, decisions and thresholds in this article are current as at 29 October 2026. Several of them are moving: one wage threshold changed by royal directive four days before this was written, and one exemption expires in January 2027.

A note on sources. The Nitaqat procedural guide, the profession localisation guides and the Saudi Press Agency releases quoted below exist only in Arabic, and the translations are mine. Where the Ministry of Human Resources and Social Development publishes its own English text, as it does for Ministerial Decision No. 182495 and for the Labour Law, I say so and quote that. The Arabic governs in every case.

Nitaqat is not a percentage until your sixth employee

Nitaqat is the programme that decides whether the Ministry of Human Resources and Social Development will give your Saudi entity the services it needs to employ anyone who is not Saudi. It was restructured by Ministerial Decision No. 182495 of 11/10/1442H, in force from 1 December 2021, and the procedural manual attached to that decision, in the Ministry's own English, says what it did to company size categories:

"THIRD: Cancel the classification of Firms according to its size and the applicable Localization rate within Nitaqat Program and apply the method of calculation of Ranges based on the number of workers."

So the small, medium, large and giant categories are gone, and with them every lookup table built on them. If an adviser hands you a Saudisation percentage drawn from a band called "small enterprise, 6 to 49 employees", they are quoting an instrument that has been dead for nearly five years. That band, the former small category (B), covered exactly 6 to 49 workers in the superseded Nitaqat Manual 3.0. Part of the reason the dead grid survives in advisory material is that the Ministry has never taken it down: its regulations index still serves an annex of Saudisation rates for communications and IT activities dated 21 February 2021, a full band by size table running from small category (B) at 6 to 49 up to giant at 3,000 and above, which Decision 182495 superseded ten months later.

What replaced it is in the procedural guide for the Developed Nitaqat programme 2026, issued by the Ministry in the first quarter of 2026 for a new three year phase. Two files have been served, one dated 21 January 2026 and the current one created on 2 February and posted in March, and their constants are identical. The minimum Saudisation rate for each band is:

"y = m log (x) + c y is the minimum percentage for the band. m is a constant for the curve for each band and activity (Annex 1). c is a constant for the localisation of each band and activity and year for a period of 3 years and beyond (Annex 1). x is the total workforce of the entity. log (x) is the function for calculating the natural logarithmic value of the total workforce."

Two things in that definition matter more than the maths. The first is that x is total headcount, Saudi and non Saudi together, so every expatriate you add raises the percentage you have to hit as well as the denominator you have to hit it against. The second is that c is published three years forward. For the IT solutions activity, Annex 1 of the 2026 guide gives these constants:

Bandmc, 2026c, 2027c, 2028
Low green2.1926.7628.7630.76
Medium green2.3432.5434.5436.54
High green2.9140.0242.0244.02
Platinum3.2248.1550.1552.15

In all six information technology and communications rows, the constant rises by exactly two points every year in every band. Across Annex 1 as a whole that is not the pattern: of its 158 band rows, 54 step by two and the rest step by nothing, one, three, four or five, so read your own row rather than assuming the IT step. Within IT, though, your Saudisation requirement increases annually with no new decision, no announcement and no consultation. That is unusual, and it is the single most useful planning fact in the programme: you can calculate your 2028 obligation today. It also ratchets between phases. Table 2 of Decision 182495 set the IT solutions low green constant at 22.76, 25.76 and 27.76 for the three years of the previous phase. The new phase restarts it at 26.76 and runs it to 30.76.

Run the equation and the small team position falls out. At six total staff in 2026, low green is 2.19 times the natural log of 6, plus 26.76, which is 30.68 percent. Two Saudis out of six is 33.3 percent, so two clears it. Medium green is 36.73 percent, which two does not clear, so you need three out of six. At ten total staff low green is 31.80 percent, which needs four.

Below six, the equation does not run at all. The procedural guide does not say so. The Ministry's own Developed Nitaqat calculator does. It refuses any headcount of five or fewer, its input validator requiring a number greater than five, and it says why:

"The calculator is designed for establishments that have a workforce of 6 workers or more." "Dear client, an establishment that has 5 workers or fewer requires the addition of one Saudi worker only in the establishment."

That is the cliff. A four person Riyadh office with one Saudi and three expatriates satisfies Nitaqat. Add a fifth and a sixth person on the expatriate side and you are at six total with one Saudi, which is 16.7 percent against a low green threshold of 30.68 percent, and you are in the red band. Add a seventh and it is 14.3 percent against 31.02 percent. The hire that breaks you is not the one that crosses a percentage. It is the one that crosses a headcount.

Two qualifications keep this honest. The number that bands you is an average rather than Monday morning's headcount: the 2026 guide defines the localisation rate using the sum of the averages of Saudi and expatriate staff across the entity's establishments, and the calculator directs users to their average rate. The guide does not state the averaging window. A 26 week window is set out in the superseded Nitaqat Manual 3.0, which also pro rated a newly established entity over the weeks it had existed, but no current instrument I could reach restates the number. So the sixth hire moves you over weeks rather than overnight. And the sub six treatment itself is not in the procedural guide, the attached manual or the Implementing Regulations. It lives on the Ministry's calculator and in the dead size category of the 2019 manual, which treated five workers or fewer as its own class. Confirm it against your own Qiwa file before you build a plan on it.

One further trap. There is no single information technology row in Annex 1. There are six: IT solutions, communication solutions, IT infrastructure, communications infrastructure, operation and maintenance in IT, and operation and maintenance in communications. The 2026 low green constants range from 15.96 for operation and maintenance in IT to 27.76 for communication solutions, a spread of almost twelve points. That does not translate directly into a twelve point difference in what you must hit, because the curve constants differ too: operation and maintenance in IT runs at 4.85 against 2.19 for IT solutions, so at six staff the actual low green thresholds are 24.65 percent and 30.68 percent, and the two curves converge as headcount grows. The activity is assigned from the business sector the entity practises, not from how you describe yourself, so it is worth knowing which row you are in before you model anything.

One definitional point that matters to anyone staffing Riyadh from the region: the guide defines expatriate labour as workers who are not nationals of the Gulf Cooperation Council states, while x is total labour, so a Kuwaiti or Emirati employee falls into neither limb of the ratio.

It is also worth knowing what the equation is a derogation from. Article 26(2) of the Labour Law, issued by Royal Decree No. M/51 of 23/08/1426H and since amended, provides in the Ministry's own English text that "The percentage of Saudi workers employed by the employer shall not be less than 75% of the total number of his workers. The Minister may temporarily reduce this percentage in case of non-availability of adequate technically or academically qualified workers or if it is not possible to fill the vacant jobs with nationals." Article 26(1) binds "All firms in all fields, and regardless of number of workers". The 30 percent you are calculating is the Minister's reduction of a statutory 75 percent, not the statutory rule itself.

The band that ends your operation is red, and the reason is renewals

Most descriptions of Nitaqat treat red as "cannot recruit" and anything green as fine. The 2026 guide's own service lists say otherwise. These are the five items under the red band, translated from the guide:

"Not permitted to change the professions of the expatriate workers employed by it. Not permitted to have expatriate workers' services transferred to it. Not permitted to request new visas. Not permitted to issue work permits for new expatriate workers. Not permitted to renew the work permits of the expatriate workers employed by it."

And these are the four items under low green:

"Suspension of the receipt of new visa applications. Suspension of the receipt of applications to change expatriate workers' professions to available professions. Ability to renew the work permits of the expatriate workers employed by it regardless of the duration of their residence, provided that no more than six months remain on the worker's residence permit at renewal. Immediate calculation in the Nitaqat programme."

The difference is the last line of the red list. Low green stops you growing. Red stops you renewing the permits of the people you already have, which means that unless you fix the band your existing team becomes unlawful one by one as their permits run out. That is a wind down, not a recruitment freeze, and it is why the planning question is never "are we green" but "how far are we from red, and how fast could we get back".

This is not merely programme policy. Article 8 of the Implementing Regulations of the Labour Law authorises the Ministry to withhold all or some of its services from establishments that do not achieve the determined localisation rate, and the Ministry's English user guide for issuing and renewing work permits, dated 30 August 2026, states the gating condition in terms: "Level of Nitaqat must Not be red for 8 consecutive weeks." Read literally that is a tolerance rather than a switch: the renewal block attaches after eight consecutive weeks in red, not on the first calculation that puts you there. Red is a two month clock. The guide's own red list is unqualified, and nothing I could find reconciles the two, so treat eight weeks as the outside case and not as a planning allowance.

There is no grace period for a newly licensed entity in any current instrument. What the superseded manual gave instead was pro rating, calculating the rate over the weeks since incorporation, which is a different thing: it smooths the number, it does not suspend it. A new Saudi subsidiary that opens with four expatriates and no Saudi is banded from its first calculation, not after six months.

Who counts as a Saudi, and what the counting costs

A head is not a head. The Ministry announced on 18 November 2020 that it had raised the minimum wage for counting a Saudi in Nitaqat from SAR 3,000 to SAR 4,000, and quoted the decision:

"For a Saudi worker to be counted in the localisation percentage calculated in the Nitaqat programme as one worker, his monthly wage shall not be less than SAR 4,000. A Saudi worker whose monthly wage equals SAR 3,000 is counted as one half only in the localisation percentage calculated in the Nitaqat programme. A Saudi worker whose monthly wage is less than SAR 3,000 is not counted in the localisation percentage calculated in the Nitaqat programme. A Saudi worker whose monthly wage is more than SAR 3,000 and less than SAR 4,000 is counted as one half only in the localisation percentage calculated in the Nitaqat programme."

The drafting is its own warning: the decision handles a wage of exactly SAR 3,000 in a sentence of its own, and states the half count limb twice rather than once. The same decision counts a part time Saudi as half a worker where social insurance contributions are paid and the monthly wage is at least SAR 3,000, with no counting at more than two entities, and a Saudi on the flexible work system as one third on completing 168 hours. For a team planning around a headcount of five, two part timers are one counted head and two bodies.

Note what that press release is: the Ministry quoting a ministerial decision whose number it does not give. The decision itself is not published on the Ministry's regulations index, so the most cited threshold in Saudi workforce planning rests on a press release. Treat the figure as reliable and the citation as weak.

It is also about to move. On 14/05/1448H, corresponding to 25 October 2026, the Saudi Press Agency published a royal directive issued alongside the announcement of electricity and water tariff changes from 1 January 2027:

"The measures also cover Saudi workers in private sector establishments, by raising the minimum wage required for counting a Saudi worker in full in the localisation percentages under the Nitaqat programme to SAR 5,000, with application to begin 6 months from the date the measure commences, then to SAR 6,000 twelve months from the date the first increase begins to apply."

Three things about this. It is a royal directive reported by the state news agency, not yet a ministerial decision and not yet gazetted. It does not say what "the date the measure commences" is, so the two dates cannot responsibly be converted into a calendar. And it is not a minimum wage: Article 89 of the Labour Law gives the Council of Ministers power to set one and that power has not been exercised for the private sector generally. You may lawfully pay a Saudi SAR 3,500. They simply count as half a person.

Even a correctly paid Saudi counts for nothing unless the contract is documented. The Ministry announced on 15 March 2026 that from 15 April 2026 the Nitaqat calculation is built from employment contracts documented electronically on the Qiwa platform, resting on Council of Ministers Decision No. 195 of 04/04/1443H, and said that documenting Saudi employees' contracts through Qiwa is a basic condition for counting them. A company running Saudi payroll from Warsaw on a paper contract has an employee the system cannot see.

Two routes that look like shortcuts are not. The Ajeer programme, governed by the rules for outsourcing services between establishments issued by Ministerial Decision No. 60339 of 06/05/1447H, defines the outsourced worker throughout as the non Saudi worker, and its only Nitaqat provision, Article 11(2), says that non Saudi workers registered in a service contract do not affect the beneficiary establishment's band at all. They neither help you nor hurt you, so Ajeer lets you borrow labour and not compliance. A related trap for a European group: Article 6(6) requires an Ajeer permit even for moving a worker between a parent and its own subsidiaries. And registering a Saudi who does not actually work for you is a named grave violation in the current schedule of violations and penalties, Ministerial Decision No. 112377 of 21/08/1447H, where the entry reads "the employer registering a Saudi worker among the workers of its establishments without an actual employment relationship" and the fine is multiplied by the number of persons registered. Two rows above it in the same schedule sits the enforcement limb for the profession decisions in the next section: failure to comply with the localisation percentages for professions and activities covered by ministerial decisions, also grave, with the fine multiplied by the number of non Saudi workers above the prescribed percentage.

Two profession decisions reach a small software team before Nitaqat does

Nitaqat is an entity level ratio. Running underneath it is a separate layer of decisions that localise named occupations, and for a small foreign vendor two of them matter far more than the band.

The first is the one almost no European company sees coming. The procedural guide for the localisation of administrative support professions, issued under Ministerial Decision No. 132249 of 5 April 2026, sets the rate and the scope in two consecutive sentences:

"Restriction of work to Saudis at 100% in the targeted professions at entity level, as set out in Table No. (1)." "This decision applies to all private sector establishments operating in the Saudi market that employ one worker or more among those working in the administrative support professions set out in Table No. (1), ..."

The sentence goes on to provide that where the same professions are targeted by an earlier or later decision at a different rate, the higher localisation percentage applies.

One hundred percent, at one worker or more, with no small business exception. The Ministry's announcement of the update on 6 April 2026 says it closed 69 professions across secretarial work, clerical work, translation, data entry and administrative support. The targeted codes include administrative assistant, secretary, executive secretary, data entry clerk, receptionist, human resources clerk and translator. The guide splits them into two tables: the Table 2 professions bound from the decision's issue date of 5 April 2026, and the Table 3 professions after a six month grace period, which the guide's own timeline puts at 4 October 2026. Both dates have passed, and there is no third table and no extension. The guide also closes the obvious workaround twice, saying the decision applies to the job titles in the classification "and the actual work of the worker", and providing in its penalties section that penalties apply where an establishment assigns the tasks of a localised profession to a non Saudi worker directly or indirectly under any other job title. And it is band blind: the guide states that the entity's Nitaqat band does not affect the calculation of the administrative support localisation percentage at all.

So the first person you were going to hire locally and cheaply, the office administrator, is the one role in your Riyadh office that cannot be filled by anyone but a Saudi, and the obligation attaches at your very first such hire rather than at any threshold.

The second decision runs the other way, and it is unusually generous. The procedural guide for the localisation of communications and information technology professions, under Ministerial Decision No. 28889 of 18/02/1442H, imposes 25 percent in each of three occupational groups: communications and IT engineering professions, application development and programming and analysis professions, and technical support professions. But its scope clause carries two separate reliefs:

"This decision applies to all private sector establishments operating in the Saudi market that employ 5 workers or more among those working in the communications and information technology professions within a single group, the titles of which are specified below (Table 2), and the localisation percentage will be calculated at entity level, and small establishments operating in the communications and information technology activity or activities in the value chain are excepted."

Five or more within a single group, not five in IT overall. The guide puts that beyond argument in its calculation section, which says the localisation percentages do not apply to a group where the number of workers in its professions is four or fewer, and its own worked example marks a two engineer group as not applicable. A four developer team is therefore outside the decision on the face of the instrument. The scope clause adds a second relief for small establishments, but the guide nowhere defines the term, and on the Small and Medium Enterprises Authority sizing that Saudi instruments normally borrow, a four person company is micro rather than small. Rely on the headcount rule, which is explicit, and treat the small establishment exception as a second line of argument rather than a second answer. The wage floors, where the decision does bite, are SAR 7,000 for engineering roles, SAR 7,000 for development, programming and analysis roles, and SAR 5,000 for technical support, each measured on the wage registered with the General Organization for Social Insurance rather than on the contract.

One related question that costs European companies real time: does a software engineer have to register with the Saudi Council of Engineers? Under these instruments, no. The procedural guide for the localisation of engineering professions, issued under Ministerial Decision No. 93483 of 31 December 2025 and applying from 30 June 2026 at 30 percent with a SAR 8,000 wage floor, gives professional accreditation from the Saudi Council of Engineers a clause of its own and makes it decisive: an unaccredited engineer is not counted. But its Table 1 is an exhaustive list of 46 occupational codes, and the information technology engineering block running from 214910 to 214914, which includes IT engineer, network engineer and software engineer, is simply missing between the research and development engineer at 214908 and the nuclear engineer at 214915. Those five codes appear instead in the ICT guide, which imposes no such condition. Professional accreditation appears in the ICT guide exactly once, in a boilerplate answer about how the system checks data, and never as a condition of counting anyone. The carve out looks deliberate.

The sales side of this picture is covered elsewhere. The 60 percent localisation of marketing and sales professions, the nine sales profession codes, the SAR 5,500 floor attached to that decision and the three worker trigger are set out in our piece on entering the Saudi market as a technology company, and the comparison with the much lighter Emirati position is in which GCC country to enter first. Local content, which is a procurement scoring mechanism rather than an employment rule and is routinely confused with Saudisation, is a different apparatus again and is set out in how Gulf enterprise procurement actually works.

The arithmetic, and the result that surprises people

Here is what each head actually costs in statutory terms, leaving salary aside.

A non Saudi employee. The expatriate levy, imposed under Council of Ministers Decision No. 197 of 23/03/1438H, is published by the Ministry at SAR 800 per month, SAR 9,600 a year, for each non Saudi in excess of the number of Saudi workers, and SAR 700 per month, SAR 8,400 a year, for each non Saudi up to the number of Saudis. The work permit itself is SAR 100 for twelve months, pro rated to SAR 25, 50 and 75 for three, six and nine months under Council of Ministers Decision No. 325 of 13/06/1442H, which the Ministry describes as a continuation of Decision 197 rather than a replacement for it.

Two widely repeated claims about that levy are stale. The first is that matching your expatriates with Saudis exempts you from it. That was true under the original schedule, where the matched column was zero, but from 1 January 2018 the matched limb became a positive rate and it is now SAR 700 against SAR 800. The balancing rule survives as a 12.5 percent discount, not as an exemption. The second is that the levy escalates annually. The escalation ran in four annual steps to 1 January 2020 and no later step has been published. The rates have not moved in nearly seven years, and the only change to the levy since is the industrial cancellation below.

There is a genuine small establishment exemption, and a foreign owned subsidiary almost certainly cannot use it. The Ministry's English statement of the conditions covers establishments with nine workers or fewer including the owner, and exempts two expatriates "if its owner is full-time working there and is registered with Social Insurance", or four if there is also at least one full time Saudi employee. The condition is a natural person owner working in the business. A Riyadh LLC whose shareholder is a Polish or German parent company does not meet it. The exemption is also time limited, though less precisely than is usually reported. Qiwa has notified establishments that work permit periods after 14 Sha'ban 1448H, which falls on 22 January 2027, will not be exempt, and the notification was reported by the Saudi daily Okaz in October 2026. No Council of Ministers decision fixing that date has been published, and the Ministry's own announcement gives a three year extension from 25 March 2024 with no terminal date, which would run to March 2027. Treat 22 January 2027 as the platform's working date rather than a gazetted one, and note that the platform is enforcing a date earlier than the announcement implies.

Nor is there any sectoral relief for software. The industrial sector relief that ran from 1 October 2019 did not lapse. It was superseded on 26/06/1447H, 17 December 2025, when the Council of Ministers approved the outright cancellation of the financial compensation on expatriate workers in establishments holding an industrial licence. The Arabic verb is cancellation, not deferral, and no decision number was published with it. Nothing equivalent exists for IT or services, and none is announced.

A Saudi employee. Under Article 18 of the Social Insurance Law, issued by Royal Decree No. M/33 of 03/09/1421H, the pensions branch is 18 percent of the contributory wage split equally and occupational hazards is 2 percent borne by the employer. Unemployment insurance sits in a separate law, the Saned scheme, and the Organization's employers' booklet puts it at 1.5 percent split equally. The employer therefore pays 11.75 percent. The 2024 reform, under Royal Decree No. M/273 and Council of Ministers Resolution No. 1022 both of 26/12/1445H, phases the pensions share up by half a point a year, reaching 10 percent for the employer in the year from 1 July 2026 and 11 percent from 1 July 2028, so the employer rate is 12.75 percent this year. The increase applies to the pensions branch only, and only to employees with no contribution history in the civil retirement or social insurance systems before 3 July 2024. It is a property of the person, not of the company. Hire an experienced Saudi salesperson and you pay 9 percent, not 10.

A non Saudi attracts only the 2 percent occupational hazards branch. Article 4 of the same law applies that branch to all workers without distinction of nationality but restricts the pensions branch to Saudi workers, and Saned is Saudis only. The contributory wage is basic pay plus housing allowance plus commissions, not total remuneration, and is capped at SAR 45,000 a month by Article 19. End of service awards under Articles 84 and 85 of the Labour Law are identical for both nationalities and have no cap, though Article 86 lets the parties agree to exclude commissions and sales percentages from the wage used to settle the award, which is worth knowing for a commission heavy sales hire.

So on GOSI alone the employer pays about 9.75 percentage points more for a Saudi than for an expatriate on the same wage. The figure usually quoted is twice that, because people add the employee's own deduction, which is the employee's money.

And then the subsidy inverts it. The Human Resources Development Fund's Employment Support product pays the employer a fixed 30 percent of a Saudi hire's wage in the first and second years, rising to 50 percent where targeted activity, profession, gender, disability, establishment size or location uplifts apply, "provided that the total support amount does not exceed SAR 3,000 for the first and second year or 50% of the monthly wage, whichever is less, and the full support is paid to the establishment". The wage must be between SAR 4,000 and SAR 15,000, the employee must be ninety days into GOSI registration before the application window opens, and support runs up to 24 months.

The eligibility that matters here is the eligibility that is not there. The Fund's English conditions page lists exactly two establishment criteria: that the establishment is not on the Fund's list of suspended entities, and that it accepts the terms and conditions. No ownership test. No minimum size. No Nitaqat band. A newly licensed, foreign owned, red band entity with two employees qualifies on the published conditions.

Put the columns together for a Saudi and a non Saudi each on SAR 15,000 a month, taking that as the contributory wage. On the 11.75 percent rate, meaning a Saudi who was already contributing before 3 July 2024, the Saudi costs the employer roughly SAR 21,150 a year in social insurance and the expatriate roughly SAR 3,600, a gap of about SAR 17,550. A first time entrant to the labour market costs 12.75 percent, so SAR 22,950 and a gap of about SAR 19,350. Against that the expatriate costs SAR 9,700 a year in levy at the excess rate plus permit, which the Saudi does not, and the Fund pays up to SAR 36,000 a year for the Saudi for two years, which the expatriate does not. For those two years the Saudi hire is the cheaper of the two by a wide margin, and from year three the expatriate is cheaper by roughly SAR 8,000, or roughly SAR 9,500 if the Saudi is a first time entrant.

That is not the shape of the problem most people expect, and it is worth saying plainly: the cost of Saudisation for a small vendor is not the cost of Saudis. It is the cost of expatriates, and the quota is what forces you to carry them in a particular ratio.

One product that does not help, for a precise reason. Tamheer, the graduate on the job training product, pays the trainee SAR 3,000 a month directly for three to six months with no GOSI cost and no end of service exposure, which looks ideal for a new office. Its establishment conditions require a medium green Nitaqat band or above and cap trainees at 10 percent of total headcount, Saudi and non Saudi together, with a ceiling of 100 trainees. A new office is below medium green, and 10 percent of five people is nobody, so it is unavailable exactly when it would be most useful.

The exemptions that do not exist

Three reliefs are quoted at European software companies constantly. One of them cannot be traced to any instrument, and two have been misread.

The regional headquarters licence does not exempt you from Saudisation, and nobody can say where the exemption lives. The claim of a ten year Saudisation exemption appears in every advisory note on the RHQ programme. Its documentary origin is a Ministry of Investment programme page from February 2022, and both of the PDFs that page served now return HTTP 404. The current MISA Investor Guide of September 2026 devotes a dedicated row to RHQ obligations and does not mention Saudisation at all, while expressly imposing localisation obligations on the hundred percent foreign owned commercial activity row three rows above it. The Ministry of Human Resources publishes 42 localisation procedural guides by sector and profession and none of them concerns regional headquarters. MISA's own licence terms and conditions set out eight numbered requirements for obtaining an RHQ licence and grant no employment relief at all, in the same document that imposes "Train 30% of Saudis" on hundred percent foreign owned trading licences. The Royal Commission for Riyadh City, which owns the programme, updated its RHQ page on 13 October 2026 and lists the financial incentives as four zero rate tax lines, with the programme services being office space, logistics, consulting and discounts. And when the Minister of Investment announced the incentive package on the state news agency on 5 December 2023, the formulation used was not exemption but "flexible Saudisation requirements", in a sentence that states the tax relief with a precise rate, a precise base and a precise term of thirty years. The drafters knew how to write an exemption. They wrote one for tax and not for labour.

The RHQ route also runs the wrong way for a small vendor. The same Investor Guide requires an RHQ to employ at least fifteen full time employees within one year, at least three of them at executive director and vice president level, and provides that "The RHQ shall not directly conduct commercial operations that generate revenue other than RHQ License activities". It is a separate, non trading entity. Your Saudi trading company keeps its own Nitaqat band regardless. A narrower benefit is usually listed alongside the Saudisation claim, relief from professional accreditation requirements for RHQ employees, and it is a different thing doing different work. But it rests on exactly the same documentary footing, the February 2022 package whose files are gone, and it is not in the current Investor Guide, not in the licence terms and conditions, and not on the Royal Commission's own page. Do not plan around that one either. Our piece on the Saudi RHQ requirement covers the programme's government contracting side.

Special economic zones do not exempt you either. They move the rule maker. Article 9 of the regulations for the Cloud Computing and Informatics Special Economic Zone, dated 27/07/1447H corresponding to 16 January 2026 and published by ECZA, reads in full: "Localisation percentages. The Relevant Entity, after obtaining the Authority's approval, shall set the localisation requirements, taking into account developments in the growth and development of business in the Zone and the availability of qualified national cadres, and the exemptions and incentives granted to it, in coordination with the Ministry of Human Resources and Social Development." Article 13 of the King Abdullah Economic City SEZ regulations is word for word the same. The Relevant Entity is a defined term and who it is differs: in the Cloud Computing zone it is the Communications, Space and Technology Commission in coordination with the Royal Commission for Riyadh City, and in King Abdullah Economic City it is Emaar The Economic City, a company. In both instruments a zone minimum wage may not fall below the minimum applicable elsewhere in the Kingdom, workplace monitors inside the zone are appointed by the Ministry by agreement with the Authority while the Authority's board defines the violations and sets the inspection mechanisms, and ordinary Saudi law applies residually. The guide of controls and conditions for the zone exemptions and incentives, which Article 29 of the Cloud Computing regulations and Article 33 of the KAEC regulations require the Authority to issue, has not been issued. ECZA's own marketing says "100% Flexible workforce requirements", which is again flexible and not exempt.

Your investment registration does not depend on your Nitaqat band. The Investment Law of 2024 and its Implementing Regulations of 2025 contain no Saudisation, employment or Nitaqat provision whatever. Article 13 of the Implementing Regulations makes the annual update a declarations exercise, with the Ministry notifying the result within five working days, and Article 30 of those Regulations lists the serious violations as a closed set of five, none of them about labour. Nitaqat is enforced by the Ministry of Human Resources against your Qiwa file, through visa and permit blocks, not by the Ministry of Investment cancelling your registration. The distinction changes who you talk to and what failure looks like.

While we are clearing undergrowth: the SAR 300 million investment undertaking and SAR 30 million cash capital figure that frightens software companies out of Saudi Arabia applies, in the Investor Guide, only to the hundred percent foreign owned commercial activity, meaning trading and reselling, with a second option of SAR 200 million plus one of several sectoral standards. The services and ICT route carries none of it.

The gate that actually delays your first hire is a document check

If something stops you putting a named Polish engineer in Riyadh next quarter, it is unlikely to be the quota. It is more likely to be professional verification.

The Ministry announced on 20 January 2025 that it had completed the rollout of the professional verification service, enforcing Council of Ministers Decision No. 195, to 160 countries in cooperation with the Ministry of Foreign Affairs, covering 1,007 occupations and continuing to cover all high skill occupations falling within groups 1 to 3 of the Saudi Standard Classification of Occupations, "to include the engineering and health professions". The purpose, in the Ministry's words, is to confirm that the expatriate worker holds reliable academic qualifications and the practical experience the Saudi labour market requires "before entering the Kingdom". Groups 1 to 3 are managers, professionals, and technicians and associate professionals, and a software developer, a solutions architect, a sales manager and a country manager all fall inside them as a matter of classification.

Two cautions. The Ministry has not published the list of the 1,007 occupations already live, and the only expansion it names is engineering and health, so the right planning assumption is that these roles sit inside the declared target scope and may be reached, not that verification is biting on them today. And the verification announcements cite Decision No. 195 with no date, while the Qiwa contract documentation rule cites a Decision No. 195 of 04/04/1443H. They may well be the same instrument. Nothing published says so, so do not assume it.

This is routinely confused with a different programme. The professional examination, approved by Ministerial Decision No. 137860 of 23/07/1442H, is a sat examination valid for five years, and its annex covers electricity, automotive mechanics, welding, plumbing, and refrigeration and air conditioning. There is no software and no management in it. Writing about the trade exam when you mean the pre arrival document check gets the obstacle backwards, because one of them will never touch your team and the other one may hold up every relocation you plan.

The first visa, at least, has a documented route that does not depend on your band. The MISA Investor Guide publishes a senior professions visa and work permit service for general manager, chief executive and chairman roles. The visa needs the investment register, the commercial register, the passport, the founding contract and the nationality and country of arrival; the work permit needs the investment register, the commercial register, the passport and the border number. The estimated processing time for each is one working day, and for the work permit the guide records "Service Conditions & Restrictions: None". The guide adds that once a visa has been issued for one of those high level professions, the second can be issued through the Ministry of Human Resources electronic services under the establishment's own account. The bottleneck for a new entity is the first named individual, and the way through it is the job title.

What this means in practice

Plan the Saudi entity around five people, and treat the sixth as a decision rather than a hire.

Concretely, for a European software company opening in Riyadh: build the entity as a services or ICT licence, never a commercial one, and keep total headcount at five or fewer for as long as the commercial plan allows. Inside those five, one must be Saudi, paid at or above SAR 4,000 on the GOSI registered wage and contracted through Qiwa, and if the royal directive of 25 October 2026 commences as announced that figure becomes SAR 5,000 and then SAR 6,000, so budget at SAR 6,000 now rather than repricing twice. Make that Saudi your office administrator if you need one at all, because the administrative support professions are already closed to non Saudis at one worker or more, so you would be hiring a Saudi into that seat regardless and you may as well have the Nitaqat count for it.

Apply for Employment Support on day 91. On a SAR 10,000 salary it pays the SAR 3,000 monthly cap for two years, which is SAR 72,000 and more than the whole social insurance and end of service cost of that employee over the same period. There is no ownership test and no band condition, and the number of foreign owned entities that never claim it is the quiet subsidy the Saudi system hands to companies that read the rules.

When the sixth head is genuinely needed, make it Saudi. Going from five to six with an expatriate takes you to one Saudi in six, which is 16.7 percent against a 30.68 percent low green threshold, and red stops you renewing the permits of the five people already there. Going from five to six with a Saudi takes you to two in six, which is 33.3 percent and clears low green. The marginal cost difference between those two hires runs to roughly SAR 29,000 in the first year on a SAR 15,000 wage: about SAR 9,700 of levy and permit you avoid, plus a further SAR 1,200 because a second Saudi moves one existing expatriate from the SAR 800 column to the SAR 700 column, plus SAR 36,000 of wage support you gain, less about SAR 17,550 of extra social insurance. At a SAR 10,000 wage it is about SAR 35,000. Only one of the two hires keeps your existing team's permits renewable.

Finally, stop modelling the exemptions. Do not plan around an RHQ Saudisation waiver that no published instrument contains, do not plan around a special economic zone whose Saudisation rules are expressly reserved to a future decision of the competent entity, and do not plan around the small establishment levy exemption, which needs an owner who is a natural person and which Qiwa has notified will stop covering work permit periods after 22 January 2027. The reliefs that are real are published, if unevenly: the sub six treatment, which lives on the Ministry's calculator rather than in the procedural guide and should be confirmed against your own Qiwa file before you build a plan on it; the four or fewer rule in the ICT decision, which is in the decision itself and is the firmer of its two reliefs; and the wage support. They are all free, and all more valuable than the ones in the brochures.

If you want the Nitaqat arithmetic run against your own planned headcount and activity code before you commit to an entity, get in touch.

Sources

This article is general information about Saudi labour, immigration and investment rules as published at 29 October 2026, and it is not legal, tax or immigration advice. Saudisation rates, wage thresholds and levy amounts change by ministerial and Council of Ministers decision, sometimes without an English announcement, and the royal directive of 25 October 2026 on the Nitaqat counting wage had not been issued as a ministerial decision when this was written. Al Jindi Advisory is not a law firm. Take advice on your own facts before you commit to an entity, a headcount or a relocation.