Earlier in 2025, Saudi Arabia announced it was expanding Saudization requirements and rates for 269 professions in the private sector.
A few months later, a new localization drive was unveiled, targeting 12 jobs in sports centers and gyms in the private sector. The decision, effective from November 18, 2026, aims to localize jobs at a rate of 15% for establishments with four or more employees. It includes Saudization of 12 jobs in men’s and women’s sports centers and gyms, namely sports coach, professional football coach, sports supervisor, personal trainer, and professional athletics coach.
Compliance with the new Saudization requirements is a non-negligible aspect of a complete business setup and company registration in Saudi Arabia. This compliance places foreign companies on a path towards sustainable financial growth, making them uniquely positioned to bid on governmental projects and gain access to financial support and incentives for training programs.
Understanding the Saudization (Nitaqat) Program and the Impact of Noncompliance on Foreign Businesses
The workforce nationalization scheme, known as Saudization or Nitaqat, mandates that foreign businesses in Saudi Arabia hire a specific number of nationals based on a quota system.
Under the Saudization frameworks, foreign businesses are primarily classified into five categories: Platinum, High Green, Mid Green, Low Green, and Red.
The required quota is determined based on the proportion of Saudi employees vis-à-vis the total number of employees in a company. It varies depending on the company’s size and industry.
Typically, companies in the platinum tier boast the highest percentage of Saudi employees. The Red Zone indicates minimal compliance, with few to no Saudi nationals on staff.
The Risks of Non-Compliance
Companies in the Red Zone are more likely to experience financial and operational challenges and legal complexities due to noncompliance.
The consequences can range from significant disruptions to hefty fines. The immediate penalties can include blockage on MoL/HRSD services, inability to renew the GM Iqama or critical documents such as the commercial registration (CR), or issue the Saudization Certificate. This eventually renders the company ineligible for bidding on strategic tenders across key government projects.
In addition, as per the new labor regulations, the Ministry of Human Resources can withhold work permit renewals in case of noncompliance with the required Saudization quota. When this situation arises, the new legislation allows non-Saudi employees to transfer employers without consent.
These labor rules also oblige companies to create skills and training programs for Saudi employees.
Related read: New Labor Law Changes in Saudi Arabia: Impact on the Saudi Economy
Best Practices for Avoiding Noncompliance with Saudization Requirements (2025)
Saudization provides the optimal opportunity for foreign companies to fast-track their integration into the local economic and social landscape.
In fact, hiring local talent is a crucial aspect of achieving a successful localization strategy. Therefore, it is considered a key driver of business growth.
According to our latest Saudi Market Entry Report, 31% of businesses operating in Saudi Arabia stated that hiring Saudi professionals significantly enhanced stakeholder engagement. This edge has ultimately led to a better market position.
Staying ahead of Saudization requirements entails regular monitoring and maintaining up-to-date records of employees. Notably, companies in Saudi Arabia are required to update Saudization every week.
Using AstroLabs’ all-in-one platform ensures compliance from day one. The AstroLabs’ on-the-ground team helps connect companies to top talent and assists them in tailoring employee acquisition and retention strategies as well as managing payroll and benefits. So far, over 150 companies have subscribed to AstroLabs’ HR, PRO, and GRO services as part of its post-setup support toolkit.
When Do Companies Need to Hire Their First Saudi Employee?
Typically, the allowance period granted to foreign companies entering the market commences right after a visa or transfer request is issued, within approximately a month of opening a Ministry of Labor (MoL) file.
Below are the most common cases in which companies need to proceed with hiring their first Saudi national.
- Renewing the iqama after the allowance period
To renew the general manager’s or any employee’s Iqama, a foreign business will have to onboard a Saudi national. With that in mind, the second hire after a general manager must be a Saudi employee.
- Bidding for a project
Obtaining a Saudization certificate is required if a company is aiming to participate in a tender for public or private sector projects. This certificate won’t be issued unless a Saudi national is hired.
- When the allowance period is over
Once the allowance period has ended, a company is obligated to maintain compliance with Saudization to meet the primary compliance requirements of the MoL portal (Qiwa).
Once the allowance period is over, a business will be obliged to ensure compliance with Saudization rules to align with the requirements set forth by the Ministry of Labor’s portal (Qiwa).
- Requiring more visa quotas
When looking to issue more visa quotas for non-Saudi employees, a business will typically need to increase and maintain its Saudization percentage to obtain the aforementioned visas.
Expanded Saudization Rates (2025)
Key sectors affected by this expansion include healthcare (pharmacy, dentistry, and other medical fields), financial services (accounting), and engineering, among various other professional domains.
These changes are being phased in throughout 2025.
The government has put in place support mechanisms to streamline the process of recruiting and training Saudi nationals.
The decision aligns with the Kingdom’s Vision 2030 objectives for increasing local employment opportunities and reducing reliance on foreign workers across key economic sectors.
Thus, foreign companies setting up a business and getting a commercial registration in Saudi Arabia must tailor their hiring playbooks and workplace practices to ensure broader alignment with local regulations and remain in compliance.
Saudization Certificate: When Your Business Needs It
Foreign enterprises targeting public or private sector opportunities in Saudi Arabia must secure a Saudization Certificate. This credential validates conformity with employment localization standards and is exclusively available to companies achieving their prescribed Saudi national hiring benchmarks.
Certificate Requirements Apply When:
- Competing for government tenders and projects
- Pursuing commercial contracts in the private sector
- Expanding work permit allocations for foreign staff
- Completing annual commercial registration (CR) updates
- Requiring access to MOL and HRSD administrative platforms
Certificate Application Process
- Satisfy your industry’s mandated Saudi employment ratio
- Lodge your request with supporting materials through Qiwa
- Declare employee roster and remuneration documentation
- Remit applicable charges and await ministry assessment
- Obtain certification upon successful compliance verification
Important Considerations for International Businesses
Understanding how employees are counted toward your Saudization quota is crucial for maintaining compliance and maximizing your hiring strategy.
- Saudi employees earning below SAR 4,000 monthly contribute only 0.5 toward the Saudization count
- Hiring one employee with a disability contributes 4 toward the quota
- GCC nationals receive the same classification as Saudi citizens for quota purposes
- When a Saudi employee works for multiple companies, only the first employer receives quota credit
- Male and female Saudi employees are weighted equally in quota calculations
Frequently Asked Questions About Saudization Requirements (2025)
What is Saudization, and what are its primary objectives?
Saudization (also known as Nitaqat) is a Saudi Arabian policy that aims to boost the employment of Saudi nationals and nurture a globally competitive talent pool that can support Vision 2030’s objectives for economic diversification.
How are companies classified under the Saudization (Nitaqat) system?
Employers are classified into color-coded categories (Platinum, Green, Yellow, and Red). Companies must strive to stay in the medium green category to ensure the stability and operational efficiency of the core activities.
What are the current Saudization percentage requirements for different industries?
Requirements differ by industry and company size. Therefore, companies must regularly check the Saudization guidelines as percentages continue to be updated.
Collaborating with AstroLabs makes it easier for foreign businesses to stay abreast of regulatory changes, allowing them to fully focus on their success in Saudi.
What penalties do companies face for non-compliance with Saudization requirements?
Noncompliance can have far-reaching implications. This ranges from the inability to renew critical documents such as the CR and GM’s Iqama, as well as disqualifications from government tenders and contracts.
What support does the Saudi government provide to help businesses meet Saudization requirements?
To support companies in enhancing their acquisition strategies, the government offers various support mechanisms, subsidies and financial support through the Human Resources Development Fund (HRDF). Additionally, grace periods are frequently provided in case new regulations are implemented.