Saudi Arabia has no personal income tax, so moving from permanent to contracting is really about end-of-service benefit (EOSB), not tax. A SAR 240,000 base salary works out to about SAR 1,150/day via a PAYG/agency structure that keeps accruing EOSB. Enter your own numbers below, or flip it around to see what a day rate is worth in permanent salary terms.
Default billable days
225
of 260 working days
PAYG/agency loading
5%-12%
EOSB still accrues
Freelance permit loading
12%-22%
no EOSB, self-funded
Personal income tax
0%
Saudi Arabia levies none
Contractor structure
An agency or umbrella employs you formally, so you keep accruing Article 84 end-of-service benefit (EOSB) just like a permanent employee. Saudi Arabia has no personal income tax either way, so this loading isn't covering a tax gap, it's covering unpaid leave and job security.
Required day rate
SAR 1,152/day
To match a SAR 240,000 permanent base with a 8% loading over 225 billable days.
Day rate
SAR 1,152
Annual gross contract income
SAR 259,200
A modelling tool, not a quote. Saudi Arabia levies no personal income tax on salary or freelance income either way, so the contractor loading here isn't a tax adjustment, it's a market rule of thumb (5%-12% PAYG/agency, 12%-22% freelance permit) for unpaid leave, job security, and, above all, the end-of-service benefit (EOSB) a freelance-permit contractor forgoes entirely. See the SA EOSB Calculator for the underlying Article 84/85 accrual math this loading is built around. Not personalised financial or tax advice.
Start from the billable-days convention: a standard Saudi working year has 260 days (52 weeks x 5 days on the common Sunday-Thursday week), but you don't get paid for all of them as a contractor. Subtract 10 private-sector public holiday days, 21 statutory annual leave days, and 4 sick or bench days, and you land at roughly 225 billable days, before accounting for any gaps between contracts.
From there, your rate needs a loading on top of the equivalent permanent salary, but unlike most markets, that loading isn't about tax: Saudi Arabia has none. A PAYG/agency contractor typically needs only a 5%-12% loading, since they still accrue end-of-service benefit (EOSB) as a formally employed staff member of the agency. A freelance-permit contractor invoicing directly needs a higher 12%-22% loading, since they forgo EOSB entirely, there's no employer-employee relationship to accrue it under.
Personal income tax
Saudi Arabia levies no personal income tax on salaries or freelance/business income, for Saudi nationals or expatriates. GOSI, the social insurance deduction, applies only to Saudi national employees on a payroll (9.75% of contributable wage), never to freelance-permit income. Both contractor structures modelled here keep 100% of contract revenue before expenses.
End-of-service benefit (EOSB)
A PAYG/agency contractor accrues EOSB under Article 84 of Saudi Labor Law exactly like a permanent employee: half a month's wage per year for the first 5 years, a full month's wage per year after that. A freelance-permit contractor invoicing directly gets none of this. See the Saudi Arabia EOSB Calculator for the full Article 84/85 breakdown, and the SA Take-Home Calculator for the equivalent permanent-role numbers.
Indicative day rate ranges against comparable permanent salary packages in Riyadh and Jeddah. Actual rates vary by skill demand, seniority and contract length.
| Role / level | Permanent salary range | Average day rate |
|---|---|---|
| Mid-Level Developer | SAR 180,000 – SAR 240,000 | SAR 700 – SAR 950/day |
| Senior Software Engineer | SAR 260,000 – SAR 340,000 | SAR 950 – SAR 1,300/day |
| Tech Lead / Architect | SAR 340,000 – SAR 440,000 | SAR 1,300 – SAR 1,700/day |
| Project Manager | SAR 240,000 – SAR 320,000 | SAR 900 – SAR 1,200/day |
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5% to 12% is a reasonable range for a PAYG/agency contractor, since the agency employs you formally and you keep accruing Article 84 end-of-service benefit (EOSB) just like a permanent employee. A freelance-permit contractor invoicing directly typically needs a higher 12%-22% loading, mainly to self-fund the EOSB lump sum they don't accrue at all, plus unpaid leave and job security.
Multiply your target base salary by your contractor loading factor (1 plus your loading %), then divide by your realistic billable days for the year (225 is a common default). For example, a SAR 240,000 base salary with an 8% PAYG/agency loading over 225 billable days works out to roughly SAR 1,150/day. The calculator above runs this for your own numbers, plus the reverse: enter a day rate to see the permanent salary it's equivalent to.
It depends on your structure. A PAYG/agency contractor is formally employed by the agency, so EOSB keeps accruing under Article 84 of Saudi Labor Law exactly as it would in a permanent role. A freelance-permit or sole-proprietor contractor invoicing directly has no employer-employee relationship, so there is no EOSB at all, this calculator's higher freelance loading exists specifically to cover that gap. See the SA EOSB Calculator for the exact accrual math.
No, and this is what makes the Saudi day-rate calculation unusually simple compared to most markets: Saudi Arabia levies no personal income tax on salaries or freelance/business income, for Saudi nationals or expatriates alike. GOSI, the social insurance deduction, only applies to Saudi national employees on a payroll, not to freelance-permit holders invoicing as a business. The loading in this calculator is entirely about unpaid leave, job security, and EOSB, not tax.
A full Saudi working year is 260 days (52 weeks x 5 days on the common Sunday-Thursday week), but a contractor doesn't get paid for all of them. Subtract 10 private-sector public holiday days (Eid al-Fitr, Eid al-Adha, Founding Day, and Saudi National Day), 21 statutory annual leave days, and 4 sick or bench days, and you land at roughly 225 billable days. The calculator lets you adjust this if your own gaps between contracts differ.
PAYG/agency means an umbrella or staffing agency employs you formally, running your contract like a normal job: you keep accruing EOSB, and there's no personal income tax to withhold either way since Saudi Arabia has none. Freelance permit means you invoice clients directly under your own registration, are responsible for your own business admin, and forgo EOSB entirely since there's no employer-employee relationship, more independence, but a real benefit gap to price into your rate.
Related reading
Check the underlying EOSB math, full take-home pay, or explore Saudi Arabia salary benchmarks.
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