A comprehensive guide for corporate taxpayers in Saudi Arabia on how to claim tax deductions for training and hiring Saudi nationals under regional investment incentive programs administered by ZATCA.
📌 Introduction
As part of Saudi Vision 2030, the Kingdom encourages businesses to hire and train Saudi nationals by offering targeted tax deductions and regional investment incentives. These incentives aim to boost employment, develop skills, and stimulate economic growth in less-developed regions. Corporate taxpayers who meet the criteria can reduce their taxable income through enhanced deductions provided by the Zakat, Tax and Customs Authority (ZATCA).
🏢 Purpose of the Incentives
- Encourage businesses to employ Saudi citizens, especially in priority economic sectors.
- Promote workforce development through structured training programs.
- Support economic activity in less-developed and targeted investment regions.
- Align corporate HR practices with national Saudisation policies.
📖 Eligible Businesses
The deductions are available to corporate taxpayers who:
- Operate in Saudi Arabia with a valid commercial registration and ZATCA tax file.
- Hire Saudi nationals in compliance with Ministry of Human Resources and Social Development (HRSD) Saudisation rules.
- Provide certified training programs that enhance professional skills.
- Maintain employment contracts and payroll records for Saudi employees.
Businesses located in regional incentive zones may qualify for additional benefits, including extended deduction percentages.
💰 Deduction Structure
The incentive allows for:
- 150% deduction of training expenses for Saudi nationals when the program is certified by approved government bodies.
- 150% deduction of salaries paid to Saudi employees for a specified period after hiring.
- Additional regional incentives for companies operating in less-developed provinces, which may extend the deduction period or increase the deduction percentage.
These deductions directly reduce taxable income, lowering corporate tax liability.
📑 Documentation Requirements
- Training contracts and course outlines approved by relevant Saudi authorities.
- Certificates of completion for trained Saudi employees.
- Payroll records, salary slips, and bank transfer proofs.
- Employment contracts in line with Saudi labour law.
- Evidence of compliance with Saudisation ratios for the industry.
These documents must be retained for at least ten years for potential ZATCA audits.
📊 Example Scenario
A technology firm in a less-developed Saudi region hires 20 Saudi nationals and conducts a certified IT skills training program costing SAR 500,000. The company claims a 150% deduction on training costs (SAR 750,000) and a 150% deduction on salaries for the first year, significantly reducing its corporate income tax liability.
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- Failing to obtain certification for training programs.
- Not maintaining proper payroll and employment documentation.
- Hiring Saudi nationals for short-term roles without meeting minimum retention requirements.
- Claiming deductions for non-Saudi employee training.
💡 Best Practices for Corporate Taxpayers
- Develop a structured HR and training policy aligned with incentive rules.
- Engage certified training providers recognised by Saudi authorities.
- Coordinate with HRSD to maintain compliance with Saudisation quotas.
- Track all expenses and salaries related to Saudi employee training and hiring.
- Consult with a tax advisor to ensure full utilisation of the available deductions.
✅ Conclusion
The deductions for training and hiring Saudi nationals offer a win-win for businesses and the Kingdom’s economy—boosting skills, enhancing employment, and providing tangible tax savings. Corporate taxpayers who leverage these regional investment incentives while maintaining full compliance with ZATCA rules can optimise their tax position and contribute to national development goals under Saudi Vision 2030.
