The Impact of Recent Saudization Rules on the Accounting Profession in Saudi Arabia

 


Introduction

Saudi Arabia has recently announced new Saudization rules aimed at increasing the employment of Saudi nationals in various professions, including accounting. This move is part of the Kingdom's broader Vision 2030 initiative, which seeks to diversify the economy and reduce its dependence on oil revenues by boosting local employment and developing human capital.

The New Saudization Rules

The Ministry of Human Resources and Social Development (MHRSD) has outlined a phased approach to increase Saudization rates in the accounting profession. Starting from October 22, 2025, establishments employing five or more accountants will be required to meet a 40% Saudization rate. This rate will gradually increase to 70% over the next five years[1][2]. The goal is to create more job opportunities for Saudi nationals and ensure their active participation in the labor market.

Saudization Calculation and Criteria

To comply with the new Saudization rules, companies must follow specific criteria and calculations:

  1. Saudization Rate Calculation: The Saudization rate is calculated by dividing the number of Saudi employees by the total number of employees in the accounting profession within the company. For example, if a company has 10 accountants and 4 of them are Saudi nationals, the Saudization rate would be 40%.

  2. Minimum Salary Requirements: The minimum salary for Saudi accountants to be counted towards the Saudization rate is set between SAR 4,500 and SAR 6,000, depending on the level of professional accreditation[1][2].

  3. Professional Accreditation: Saudi accountants must hold relevant professional certifications from the Saudi Organization of Certified Public Accountants (SOCPA) to be eligible for inclusion in the Saudization calculation[1][2].

Saudization Slabs by Percentage

The Saudization percentage requirements vary by industry and business size. Here are the specific slabs for the accounting profession:

  • Companies with 5 or More Accountants: Required to employ at least 40% Saudi nationals starting from October 22, 2025. This rate will gradually increase to 70% over the next five years[1][2].
  • Small Businesses: Defined as businesses with fewer than 50 employees and less than SAR 3 million in annual revenue[3]. Required to employ at least 20% Saudi nationals.
  • Medium Businesses: Defined as businesses with 50 to 249 employees and annual revenues between SAR 3 million and SAR 200 million[3]. Need to employ around 40% to 60% Saudi nationals.
  • Large Enterprises: Defined as businesses with 250 or more employees and annual revenues exceeding SAR 200 million[3]. The requirement may go as high as 70% to 80%, depending on the industry[4].

Example Calculation for Companies with Accountants

Let's consider a company with 10 accountants:

  • Current Saudization Requirement: 40%
  • Current Number of Saudi Accountants: 2
  • Current Number of Expatriate Accountants: 8
  • Total Number of Accountants: 10

To meet the 40% Saudization requirement:

  • Required Number of Saudi Accountants: ( 10 \times 0.40 = 4 )
  • Additional Saudi Accountants Needed: ( 4 - 2 = 2 )

As the Saudization rate increases to 70% over the next five years:

  • Future Required Number of Saudi Accountants: ( 10 \times 0.70 = 7 )
  • Additional Saudi Accountants Needed: ( 7 - 2 = 5 )

Consequences for Expatriates

While the new Saudization rules aim to benefit Saudi nationals, they also have significant implications for expatriates working in the accounting sector:

  1. Job Displacement: As companies strive to meet the new Saudization quotas, expatriate accountants may face job displacement. Firms may reduce their reliance on foreign workers to comply with the regulations, leading to a decrease in job opportunities for expatriates[4].

  2. Increased Competition: With a higher percentage of positions reserved for Saudi nationals, expatriates will face increased competition for the remaining roles. This could lead to a more competitive job market, where only the most qualified and experienced expatriates secure positions.

  3. Salary Adjustments: To attract and retain Saudi talent, companies may need to offer competitive salaries and benefits. This could result in salary adjustments for expatriates, either through reductions to balance the overall payroll or through increased salaries for Saudi employees[4].

  4. Skill Development: Expatriates may need to focus on continuous skill development to remain competitive in the evolving job market. Acquiring new certifications, enhancing existing skills, and staying updated with industry trends will be crucial for expatriates to maintain their employability.

Conclusion

The recent Saudization rules for the accounting profession in Saudi Arabia represent a significant step towards achieving the goals of Vision 2030. While these changes aim to benefit Saudi nationals by providing more job opportunities and fostering economic growth, they also pose challenges for expatriates. Adapting to the new regulations, staying competitive, and continuously developing skills will be essential for expatriates to navigate the evolving job market in Saudi Arabia.

What are your thoughts on these new regulations? Do you think they will achieve the desired outcomes for both Saudi nationals and expatriates?

[1]: Argaam [2]: Saudi Week [4]: Business Link [3]: Oxford Business Group


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