Without the General Organization for Social Insurance (GOSI) certificate in Saudi Arabia, a foreign company can’t bid on any governmental projects or complete vendor registrations with governmental entities.
Obtaining the GOSI certificate is a fundamental prerequisite for compliant operations and successful business setup in Saudi Arabia. This crucial document is proof that a company is paying the required social contributions to its employees, aligning with Saudi labor laws.
In this guide, we discuss the importance of the GOSI certificate and its requirements, and the consequences of non-compliance with GOSI regulations.
What is the GOSI Certificate and its Types?
GOSI is an independent governmental entity that provides social protection and insurance coverage, managing mandatory contributions for both Saudi nationals and expatriate employees working in private sector establishments.
A GOSI certificate provides a comprehensive snapshot of a company’s workforce, including employment periods, base salaries, and total remuneration.
Types of GOSI Certificates in Saudi Arabia
Typically, there are three certificates related to GOSI contributions that can be generated from the Ministry’s platform, with each serving a distinct purpose. Together, these certificates help companies ensure they remain in compliance with GOSI regulations and Saudi labor laws.
GOSI Subscription Certificate: This certificate shows that an entity has paid all due contributions up to the date of its issuance. It can be issued at any time and has a validity of 30 days.
Zakat Certificate: This certificate shows the total contributory wages for a specific period of time. It is provided to the Zakat, Tax and Customs Authority (ZATCA).
Occupational Safety and Health Certificate: This new certificate, issued by GOSI, shows the cases of occupational hazards or deaths that have occurred within the company for a specific period.
Current GOSI Contribution Structure and Calculation Method
Understanding the breakdown of GOSI contributions is crucial for maintaining compliance. The current structure includes:
Annuities
Saudi Employees:
- Employee Contribution: 9% of monthly wage
- Employer Contribution: 9% of monthly wage
Non-Saudi Employees: Both the company and employee contributions will be 0%.
Occupational Hazards
Saudi Employees:
- Employee Contribution: 0% (fully employer-covered)
- Employer Contribution: 2% of monthly wage
Non-Saudi Employees:
- Employer Contribution: 2% of monthly wage
- Employer Contribution: 2% of monthly wage
Unemployment Insurance
Saudi Employees
- Employee Contribution: 0.75% of monthly wage
- Employer Contribution: 0.75% of monthly wage
Non-Saudi Employees: Both the employee’s and employer’s contributions will be 0%
Ensuring Compliance With GOSI Regulations: Practical Considerations
To successfully register their entity on the GOSI platform and ensure ongoing compliance with GOSI rules, businesses must follow these key steps:
1. Register the Business and Employees: Upon incorporation, a company must register with GOSI. Both Saudi and non-Saudi employees must be registered within 30 days of their onboarding.
2. Track and Submit Monthly Contributions: GOSI contributions are due by the 15th of each month; therefore, it is crucial to ensure timely payments and avoid penalties.
3. Calculate Contributions: Companies should ensure that employee salaries and housing allowances are accurately reflected on the GOSI system.
4. Update Employee Information Promptly: Any changes to an employee’s status, such as salary increases, resignation, or termination, must be promptly recorded in the GOSI system.
5. Obtain and Renew the GOSI Certificate: The GOSI certificate is valid for 30 days. To avoid any disruption to business operations, it is recommended that companies generate a new certificate multiple times throughout the years when needed.
Consequences for late payment or non-payment of GOSI Contributions
Failure to adhere to GOSI regulations results in serious penalties, impacting their financial stability and operational efficiency.
Inability to issue the GOSI certificate: Companies that fail to pay GOSI contributions on time are unable to obtain the necessary GOSI certificate. This eventually prevents them from bidding on government projects or completing vendor registrations with governmental entities.
Payment delays: The government will withhold payments to businesses unless they can provide a valid GOSI certificate.
A 2% financial penalty: Non-compliant companies may face a 2% penalty on invoice amounts for late payments.
Employee-Related Penalties: Companies will be subject to a penalty if an employee is registered late with GOSI (unless valid documents are provided) or if a terminated employee is not removed from the system promptly.
Understanding Saudi corporate law, GOSI obligations, and the regulatory frameworks is important for any multinational company planning to set up a business in Saudi Arabia.
Working with an experienced corporate services provider like AstroLabs partners can significantly streamline the GOSI management process, which helps businesses maintain continuous compliance while focusing on core operational activities.
AstroLabs’ GOSI-focused services include sending reminders to businesses, alerting them when monthly GOSI invoices are issued. This approach ultimately helps them ensure that all GOSI due payments are accurately added in the portal and that their employee records are updated and maintained properly.
FAQs About the GOSI Certificate in Saudi Arabia
1. What is the GOSI?
GOSI (General Organization for Social Insurance) is a social insurance system that provides protection for all employees. It’s mandatory because it ensures compliance with labor laws and enables businesses to operate legally in the Kingdom.
2. How do I register my company on the GOSI portal?
Visit gosi.gov.sa, create an account with company details, submit the required documents, enroll employees, and make necessary contributions to obtain your certificate.
AstroLabs helps companies stay ahead of their GOSI requirements, ensuring that all GOSI due payments are accurately added in the portal and that their employee records are updated and maintained properly.
3. Who needs to be registered with GOSI?
All employers in Saudi Arabia must register within two weeks of meeting coverage requirements. This includes Saudi nationals and expatriate employees.
4. What is a GOSI certificate, and why is it important?
A GOSI certificate is an electronic proof of compliance with social insurance contributions, valid for 30 days. It’s required for government contracts, vendor registrations, and legal business operations.
Our on-the-ground team helps companies adhere to post-setup requirements and grow their footprint compliantly.
5. Can foreign companies manage GOSI compliance remotely?
Yes, the GOSI portal allows remote management. With AstroLabs’ on-the-ground expertise, companies can set up quickly and efficiently in Saudi Arabia while maintaining continuous compliance.