Saudi Arabia Business Setup: Key Saudization Updates in 2026
Compliance with 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.
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 a 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
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 ends
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.
New Saudization Rules to Know in 2026
Saudi has recently unveiled multiple localization decisions across various sectors, with key updates issued in late 2025 outlined below.
70% Procurement Localization
Private sector establishments with three or more employees must achieve 70% Saudi representation across 12 procurement-related professions. This decision targets roles central to supply chain operations and business efficiency.
A variety of support programs will be offered to impacted companies, including assistance with recruitment, onboarding, and employee retention; access to training and certification programs; wage subsidies through the Human Resources Development Fund; and initiatives aimed at enhancing professional stability.
Effective November 30, 2025.
30% Engineering Localization
This mandate requires private sector establishments with five or more employees to localize 30% of 46 engineering professions.
Saudi engineers filling these roles must earn a minimum monthly salary of SR8,000 and hold accreditation from the Saudi Council of Engineers, ensuring professional standards across the sector.
Effective late 2025/early 2026.
15% Sports and Fitness Localization
Private sector sports centers and gyms with four or more employees must achieve 15% Saudization across 12 roles in men's and women's fitness centers.
These include sports coach, professional football coach, sports supervisor, personal trainer, and professional athletics coach.
HRSD will provide support programs to help employers recruit Saudi nationals, offering assistance with recruitment, training, qualification, employment, and job retention, alongside access to Saudization incentives and initiatives delivered by the Human Resources Development Fund (Hadaf).
Effective November 18, 2026.
Sales & Marketing Roles Localization
the Ministry of Human Resources and Social Development announced new measures to boost Saudization quotas within marketing and sales sectors.
Phase 1: Marketing Positions
The initial phase establishes a 60% Saudization requirement for marketing positions in private sector companies employing three or more workers. Covered roles include:
- Marketing managers
- Advertising managers
- Advertising agents
- Marketing specialists
- Graphic designers
- Advertising designers
- Public relations professionals
- Photographers
A minimum monthly wage of SAR 5,500 has been established for these positions.
Phase 2: Sales Positions
The second phase increases the Saudization quota for sales roles in the private sector to 60% for businesses with three or more employees. Covered roles include:
- Sales managers
- Retail and wholesale sales representatives
- IT and communications equipment sales specialists
- Sales specialists
- Commercial specialists
These measures take effect three months following the announcement.
Expanded Saudization Rates (2025)
Earlier in 2025, Saudi announced it was expanding nationalization requirements to an additional 269 professions.
Key sectors affected by this expansion include healthcare (pharmacy, dentistry, and other medical fields), financial services (accounting), and engineering, among various other professional domains.
The government has put in place support mechanisms to streamline the process of recruiting and training Saudi nationals.
These mandates align with the Kingdom’s Vision 2030 objectives for increasing local employment opportunities and reducing reliance on foreign workers across key economic sectors. 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.
Frequently Asked Questions About Saudization Requirements
- 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.
- What is the Saudization quota for facility management?
This depends on the company’s specific economic activities, including those related to facility management. Saudization quotas vary based on the registered activity.
Economic activity codes can be checked on stats.gov.sa, and the same code can then be used in the Nitaqat calculator on Qiwa to determine the applicable quotas.