As the largest Arab state, the Kingdom of Saudi Arabia (KSA) is constantly implementing incentives to entice foreign investors to make contributions to the local workforce. In fact, the Saudi Arabian General Investment Authority was specifically established for this purpose.
There are millions of immigrants who work in Saudi Arabia each year. The iqama helps to manage foreign workers. If you are considering applying for an iqama, it is important that you understand;
- what is the iqama function
- why it is used
- the process of applying for the iqama.
What Is an Iqama?
An iqama is a residence permit.
The local employer applies and secures the work permit and iqama so that the employee can legally work and live in the KSA. The employer is considered the local sponsor.
An iqama is issued to expatriates who arrive in KSA with an employment visa. The term of employment is limited to the amount of time listed on the work permit. This is currently set at one year for work at private companies, but there is an option to renew the permit after one year.
Why Is Iqama Necessary?
Saudi Arabia has one of the largest percentages of immigrant residents of all countries. Its 2016 population was roughly 31.8 million people, which included 11.7 million foreigners. Even more strikingly, of the 13.8 million employed workers in Saudi Arabia, approximately 3 million are local nationals. In comparison, foreign hires made up more than three-quarters of the Saudi Arabian workforce.
Because foreigners serve such an important role in Saudi Arabia, the government has strict requirements related to immigration and labor policy compliance. Employers play a pivotal role in this process.
Application Process for Iqama
Because the iqama application process is often complex, many companies use the assistance of a PEO or other recognized entity to assist with the process.
The process involves many steps.
The first step is for the sponsoring company to complete an application for a Block Visa. The application is submitted to the Ministry of Labor and Social Development. This governmental entity establishes a particular quota for the number of these kinds of visas that it will issue.
If granted, the Ministry of Labor and Social Development issues a permit to the company to sponsor a foreign national employee for a longer duration, up to one year and subject to renewal.
The Ministry of Labor and Social Development bases its approval or denial off of several factors, including:
- The applicant’s nationality
- Country of origin
- Job role
- Academic history
- Relation between the specific job role and the applicant’s academic qualifications
If the visa is approved, the host company then obtains a Visa Authorization number, as well as a Power of Attorney issued through the Ministry of Foreign Affairs in the Kingdom of Saudi Arabia.
The intended employee must undergo a medical exam and receive a medical certificate from an approved medical center and submits this medical certificate and the work visa application to the Saudi Diplomatic Mission in the applicant’s country of residence.
Once the work visa is approved, the expat employee is allowed entrance into the country and can begin working. Within 90 days of entering the country, there must be a submitted application for a work permit and iqama to the Ministry of Labor and Social Development.
If the foreign employee must exit and reenter the country while the work permit and iqama are authorized, the employee must obtain an exit and reentry permit from the Ministry of Interior.
In Saudi Arabia, employers are liable for all fees associated with obtaining and maintaining a foreign employee’s work permit and iqama. The employer is also responsible for paying repatriation ticket fees if the employee stops working at the company.
How to Check Iqama
Employees who are concerned about their iqama validity or who need to know when the iqama is set to expire can check their visa validity status at the Ministry of Interior’s website. The iqama recipient must have their iqama number to use this service. This check can ensure visa validity in KSA.
Changing Regulations Related to Foreign Workers
Individuals who are interested in working in the KSA or companies looking to expand to this region should be aware of the changing regulations in Saudi Arabia that are related to foreign workers.
The country has implemented the Saudi Vision 2030 plan that seeks to achieve the following goals:
- Reducing the Kingdom of Saudi Arabia’s dependency on oil
- Diversifying the economy in Saudi Arabia
- Developing jobs in the public sector
- Supporting small and medium businesses
As part of this plan, the country is actively attempting to increase employment opportunity for nationals of Saudi Arabia, as well as to increase the number of local women in the workforce.
Additionally, the Ministry of Civil Service has requested that all ministries and governmental agencies to eliminate all expatriate workers by the year 2020. The Arab News also reports that shopping mall jobs and sales jobs in 12 retail categories are restricted to only nationals of Saudi Arabia.
Additionally, unfavorable changes in the tax law have led to disappointment of expatriates in Saudi Arabia.
In 2017, the KSA implemented a new tax that applies to foreign residents. The law is unclear as to who should be responsible for the fee, so employers in Saudi Arabia individually decide if they wish to cover the cost or pass it on to their employees. The amount of this fee is SAR 600 per month in 2019. The fee will increase to SAR 800 in 2020 for companies with a majority of foreign nationals.
Foreign employees who have listed dependent family members on their iqama must also pay a levy for each dependent once he or she arrives. The monthly rates per dependent are as follows:
- From July 1, 2018 to June 30, 2019 – SAR 200
- From July 1, 2019 to June 30, 2020 – SAR 300
- From July 1, 2020 and later – SAR 400
Because of these taxes and levies, many expatriates left the country already. After the new taxes were instituted, more than 94,000 expatriate workers left Saudi Arabia in the third quarter of 2017. Most of these were from industries that do not pay the fees. Professional companies tend to absorb the levy for expatriates and their dependents.
Importance of Working with a Local Partner
The immigration and work authorization process in Saudi Arabia can often be complex and time-consuming. In many situations, it may take several months for approval. Many applications are initially denied.
Many companies that are considering an expansion into the Saudi Arabian market use a Professional Employer Organization to assist them with this process. This option allows a company that has not established a legal entity in Saudi Arabia to have a local workforce while the Professional Employer Organization is considered the legal employer of record and has all of the liability of employers.
This type of company can complete the visa application. This option often allows businesses to expand to a new market within a matter of days, instead of the months or years it takes to establish a separate legal entity. You can learn more about this option or other ways to work with a local partner by reading some of our articles on GlobalizationPedia.