Category Archives: Legal Updates

Older posts
Newer posts

New Program for Remote Health Services Launched

Posted on by

Saudi Arabia’s Commission for Health Specialists has announced a new program for providing health services remotely.

The Commission said the program aims to train health specialists to diagnose patients remotely. They added that the application of remote health services helped to overcome the difficulties of treating old patients during the Coronavirus pandemic.

The program’s implementation will boost the performance of the health sector and save money and costs for patients.

To read more, click here.

Electronic Services Guidelines Launched

Posted on by

Saudi Arabia’s General Secretariat of Tax Committees has announced it has launched an electronic services guide. The guide includes 12 electronic services which have been linked to various integrated systems with it to verify data and information and ensure accuracy and reliability by collecting data and information from the source while saving time in importing the necessary documents and statutory requirements to boost its efforts in managing and addressing tax disputes efficiently and effectively and facilitate procedures.

This will enable customers to follow up on issues without having to visit its offices physically. Instead, they will be able to do so in a few easy steps through the General Secretariat of the Tax Committees website.

To read more, click here.

 

First Phase of Professional Verification Scheme Launched

Posted on by

Saudi Arabia’s Ministry of Human Resources and Social Development has announced that the first phase of the Professional Verification Scheme has been launched. It will verify the necessary skills employees need to carry out their jobs effectively. It will eventually be mandatory for all entities in the Kingdom.

It targets more than 1,000 specialized professions in 23 specialisms in line with the Saudi Standard Classification of Occupations. It is split into two parts. The first part covers examining professional workers in their countries before they arrive in the Kingdom and international examination centers. The second part relates to examining experienced workers currently in the Kingdom together with local examination centers.

Companies having 3,000 or more employees will be enrolled in the Program first. They will be followed by companies with between 500 and 2,999 employees and then entities with between 50 and 499 employees. It will then be followed by companies employing between six to 49 employees and then companies employing one to five employees.

To read more, click here.

Requirements for Approving Financing Portfolios for Micro-Enterprises Confirmed

Posted on by

The Saudi Arabian authorities have confirmed the requirements for approving financing portfolios for micro-enterprises. The regulations governing the approval of financing portfolios for microfinance projects set out several conditions for approving financing portfolios. The first of these is that the entity and its subsidiaries have a valid official license from licensed government agencies and an approved organizational structure and published bylaws and have an integrated headquarters in the geographical scope where it provides its services.

It also states that the objectives or activities of the governor will include the provision of services for the development of microfinance projects. Therefore, it has to have a documented program and an integrated work mechanism with a transparent methodology. It includes qualified administrative and technical staff appropriately qualified for the size and nature of the services it will provide to the beneficiary, and it has all the means and tools which will facilitate the provision of its services and the absence of any financial obligations on it. In other words, it has to be financially solvent.

The Kingdom’s National Competitiveness Centre has launched a consultation on the draft regulation to approve financing portfolios for microfinance projects. It ends on 1 September 2021.

Implementing Regulations to Accounting and Auditing Professions Law Approved

Posted on by

Saudi Arabia’s Ministry of Commerce has announced it has approved the Implementing Regulations to the Accounting and Auditing Professions Law. The regulations state that the license will be granted to someone who holds a relevant university degree.

The applicant should pass a training program. The regulations also state that the license will last for three years for part-time accountants and auditors.

Electronic Edition of Tax Regulations Guidance Launched

Posted on by

The General Secretariat of Tax Committees has launched an electronic edition of the tax regulations guidance. The electronic edition has been issued to create a comprehensive reference for all tax and zakat regulations.

The electronic edition aims to improve the processing times of tax disputes and raise public awareness about the tax regulations.

 

Registration and Subscription Regulation for Social Insurance Law Amended

Posted on by

Saudi Arabia’s General Authority for Social Insurance has announced a Decision has been issued by the Finance Minister and Chairman of the Authority approving an amendment to the registration and subscription regulation for the Social Insurance Law. The amendments will come into force on February 1, 2022.

Under the amendments, the period of time given to the employers to add subscribers becomes the end of the month of the joining and amending the period given to employers to remove the subscribers by the end of the month they are leaving.

Completing the registration of the non-Saudi subscribers and submitting their wages must also be done by the end of the month of their joining.

Saudization “Nitaqat”

Posted on by
  1. Introduction

Nitaqat is an initiative launched by the Saudi Ministry of Human Recourses and Social Development(“HRSD”) to encourage the private sector to hire Saudi nationals, thus, decreasing Saudi unemployment and increasing the share of their participation in the labour market.

The initiative restricts certain positions in the private sector to be occupied only by Saudi nationals. Currently, there are five Zones; Red, Low Green, Medium Green, High Green, and Platinum. Nitaqat applies to all entities that have 6 employees and above.

HRSD would apply Nitaqat to place the Saudi entity into a zone based on the percentage of Saudization it holds. Each range has its privileges and limitations.

Since its application in 2011, Nitaqat has been subject to different changes and updates, the latest of which was in December 2021( the “Advanced Nitaqat”).

  • What changes affected the Advanced Nitaqat
  • Using the number of employees instead of the size of the entity:

Nitaqat classifies entities by their sector, activities and number of employees using the International Classification Standard (“ISIC4”) over three years. By applying a specific equation using the Saudization percentage and number of employees, the entity will be able to know in which zone it falls for the first, second and third year onward.

 

  • Minimum wage

While there is no specific minimum wage for a Saudi national generally under the Saudi Labour Law, the MHRSD would only count an employed Saudi national towards Nitaqat if his/her basic monthly salary is at least SAR 4,000, which was SAR 3000. However, those whose salaries are SAR 3000 and less than SAR 4000, including part-time workers shall be counted as ½ of the Saudi worker. In addition, flexible-hours workers shall be counted as 1/3 of the Saudi worker, provided the worker has completed not less than 168 hours in service. Handicapped worker will be considered as 4 workers, provided that his/her salary is not less than SAR 4,000.

  • Consolidation of Related Activities

The previous Nitaqt classified organizations under 85 categories, which have been condensed to 33 activities and placed them in the same category with common characteristics.

1 Agricultural production, animal production, its services and equestrian clubs 2 Mines, Energy and Services

 
3 Industries 4 Contracting, construction, building and cleaning
5 Operation and maintenance 6 Wholesale and Retail
7 Health Services 8 Accommodation, Recreation and Tourism
9 Ground transportation and storage 10 Sea ​​and Air transport
11 Financial Institutions 12 Business Services
13 Social Services 14 Recruitment services and security guards services.
15 Personal Services 16 Combined Entities.
17 Higher Education 18 Girls’ schools, Kindergartens and Nurseries
19 Boys’ Schools and boys’ and girls’ complexes 20 International Schools
21 Selling Fuel

 

 22 Women’s goods Sale and maintenance of mobile phones
23 Restaurants with services that do not include fast food 24 Fast food and Ice-cream Shops
25 Cafés 26 Catering
27 Communication solutions 28 IT Solutions
29 postal activities 30 IT Infrastructure
31 telecommunications infrastructure 32 Operation and maintenance of communications
33 Operation and maintenance of information technology

 

  • Parallel Saudization: no reference is made to Parallel Saudization.

 

  • Nitaqat Saudization Calculation:

To explain how the equation works, the table below shows the values that need to be used to generate the minimum classification for each zone, then the Saudizatin percentage will be compared to the result to allocate the entity in the relevant zone.

Activity Zone Curve Fixed Value Absolute Fixed Value for the 1st year Absolute Fixed Value for the 2nd year Absolute Fixed value for the 3rd year
Industries Low Green 1.68 14.08 20.08 25.08
Medium Green 1.87 16.87 22.87 27.87
High Green 2.08 20.47 26.47 29.47
Platinum 2.08 23.87 28.37 32.87

 

Below is an example of an activity and the Nitaqat zones for the first year on the assumption that the entity has 19 employees (7 Saudis and 12 non-Saudis):

  • Saudization percentage= total number of Saudi employed divided by the total number of employees multiplied by 100 = xx%

7%19× 100 = 36.84

  • Equation to produce the values for each zone:

Curve Fixed Value * log(total number of employees) + absolute fixed value for the relevant year

Nitaqat Low Green Value: 1.68× log(19)+14.08= 16.22

Nitagate Medium Green Value: 1.87× log(19)+16.87= 19.26

Nitaqat High Green Value: 2.08× log(19)+20.47= 23.12

Nitaqat Platinium Value: 2.08× log(19)+23.87= 26.52

Accordingly, the entity will be placed by comparing the Saudization percentage with the results we reached above:

From 0% – 16.21 falls in Red Zone.

From 16.22 – 19.25 falls in Low Green Zone.

From 19.26 – 23.11 falls in Medium Green Zone.

From 23.12 up to 26.51 falls in High Green Zone.

From 26.52  up to 100 falls in the Platinium Zone.

 

As the Saudization percentage is: 36.84%, which exceed the minimum range of the Platinium Range (26.52), then the entity shall be placed in the Platinium Zone.

 

  • Privileges and Limitations of Each Range:

Premium Range Companies:

  • Receive applications for the balance of visas for any available professions.
  • Can change professions of their foreign employees to any other profession, except for profession restricted to Saudi nationals.
  • Can renew the work permit of foreign employees at any time, provided the remaining validity period of Iqama does not exceed six months upon renewal.
  • May transfer foreign employees’ from any of Nitqat range.
  • Shall be given a replacement visa for employees who leave the county on final exit visa.
  • Shall be counted immediately in Nitaqat program.

 

High Green Range Companies:

  • Receive applications for the balance of visas for any available professions.
  • Can change professions of their foreign employees to other profession, except for profession restricted to Saudi nationals.
  • Can renew the work permit of foreign employees at any time, provided the remaining validity period of Iqama does not exceed six months upon renewal.
  • May transfer foreign employees’ from any of Nitqat range.
  • Shall be given a replacement visa for employees who leave the county on a final exit visa.
  • Shall be counted immediately in Nitaqat program.

 

Mid Green Range Companies

  • Receive applications for the balance of visas for any available professions.
  • Can change professions of their foreign employees to other professions, except for profession restricted to Saudi nationals.
  • Can renew the work permit of foreign employees at any time, provided the remaining validity period of Iqama does not exceed six months upon renewal.
  • May transfer foreign employees’ from any of Nitqat range.
  • Shall be given a replacement visa for employees who leave the county on final exit visa and was occupying any of the specialised professions.
  • Shall be counted immediately in Nitaqat program.

 

Low Green Range Companies:

  • Cannot receive applications for new visas.
  • Can change professions of their foreign employees to other professions, except for profession restricted to Saudi nationals.
  • Can renew the work permit of foreign employees at any time, provided the remaining validity period of Iqama does not exceed six months upon renewal.
  • May transfer foreign employees’ services from the Law Green Range and below.
  • Shall be given a replacement visa for employees who leave the county on final exit visa and was occupying any of the specialised professions.

Red Range Companies:

  • Cannot file applications for new visas.
  • Cannot transfer visas.
  • Cannot change employees’ professions.
  • Cannot issue work permits for new foreign workers.
  • Cannot open new files for new branches or facilities.
  • Cannot renew employees’ work permits.

Recent Developments in Saudi Arabian Arbitration Laws

Posted on by

Arbitration is becoming an increasingly popular way to resolve disputes in Saudi Arabia. The government has taken significant steps to encourage the use of arbitration, and recent developments in the law have made the process even more efficient and cost-effective. As a result, more businesses are turning to arbitration to resolve their disputes.

In 2014, the Saudi Center for Commercial Arbitration (SCCA) was founded as the Kingdom’s first independent arbitration institution. They are a not-for-profit organization that administers Alternative Dispute Resolution (ADR) procedures guided by Shariah principles.

What Is Arbitration?

Arbitration is used as a means to resolve disputes outside the courtroom. It’s a process in which two or more parties agree to have a neutral third party, called an arbitrator, preside over their case, and make a decision.

Arbitration is often seen as a faster and more cost-effective option than going to court. It allows both parties to agree upon an adjudicator of their own choosing, rather than a court-appointed judge. The arbitrator is often a highly accomplished legal professional or former business leader, who gives both parties the opportunity to present their case.

The Introduction of Arbitration Law in Saudi Arabia

Although previously an uncommon choice in Saudi Arabia, the government has sought to increase the use of arbitration as a means to resolve disputes. In 2012, a royal decree was issued which set forth the legal framework for arbitration in Saudi Arabia. This new Law of Arbitration is based on the UNCITRAL Model Law, which is the international standard for best practice in arbitration law.

The Law of Arbitration sets out the rules and procedures that must be followed in order to initiate and conclude an arbitration proceeding. It also establishes the legal rights and obligations of the parties involved in the arbitration process.

Arbitration in Saudi Arabia is a private process, meaning that the proceedings and the award remain confidential unless there is written consent from both parties to publish the details of the award granted.

In 2013, the Enforcement Law came into effect, which provides for the enforcement of arbitration awards in Saudi Arabia. This means that if one party does not comply with the award, the other party can take legal action to have it enforced.

Cost of Arbitration in Saudi Arabia

Arbitration in Saudi Arabia is considerably cheaper than taking a case through the court and the SCCA has taken recent steps to make it even more affordable. In September 2021, they reduced arbitrator fees by 30% and the initial cost of starting proceedings by 50%.

Filing fees have now been eliminated entirely, and parties are simply required to pay a flat registration fee of SAR 5,000, which is later credited towards the administration fee. The SCCA has also introduced three arbitrator pricing tiers: minimum, maximum, and average. Fees are fixed on a case-by-case basis, depending on the complexity of the case and the time required by the arbitrators to hear and determine the case.

The Online Dispute Resolution (ODR) service also experienced a price reduction of 40%. This allows smaller businesses and entrepreneurs to have access to affordable arbitration, without the need to take their dispute to the courts.

Timeframe for Arbitration

Arbitration in Saudi Arabia is a relatively fast process in comparison to court proceedings. The time it takes to resolve a dispute through arbitration will depend on a number of factors, including the complexity of the case and the availability of the arbitrator.

Generally, arbitration proceedings will take between 6 and 12 months to complete. Once the arbitrator has made a decision, the award will be binding on the parties with a requirement to comply.

The Future of Arbitration in Saudi Arabia

According to a recent statistical report by the SCCA, arbitration continues to be supported by the judiciary and is experiencing fast growth as an alternative to court litigation. Saudi courts are increasingly reluctant to set aside arbitration awards, demonstrating their strong support for the arbitration process. Between 2017 and 2020, 107 motions were initiated to set aside awards. Out of those 107, only 6% were accepted.

In light of this continued success, it is likely that arbitration will continue to grow in popularity in Saudi Arabia. Parties who are looking to resolve disputes quickly and cost-effectively should consider arbitration as an option.

 

Vision 2030 and the regulatory reforms on the horizon

Posted on by

Since its inception in 2016, Saudi Arabia’s Vision 2030 has been positioned as a transformative blueprint for the country’s future. And while there is no doubt that the plan — which aims to wean the economy off its dependence on oil and gas revenues and make the Kingdom a global investment powerhouse — will have a profound impact on virtually every sector of Saudi society, its legal implications are most far-reaching.

From the introduction of 5G and the accompanying increase in regulation to the need for businesses to embed new systems and ways of working, Vision 2030 is certain to have a major impact on Saudi law. Perhaps nowhere is this more evident than in the area of competition law, where the plan’s ambitious diversification and privatisation goals are likely to bring increased competition — and with it, the need for stricter enforcement.

With this in mind, here’s a closer look at some of the legal implications of Saudi Arabia’s Vision 2030.

5G & Regulation

The rollout of 5G networks is set to transform the way we live and work, and the Saudi government is keen to ensure that the country is ready for this next-generation technology. Abdullah Al-Sawahah, Minister of Communications and Information Technology, stated that “Saudi Arabia is determined to be a world leader in 5G to take early advantage of its benefits.”

To that end, the government announced in 2021, that they would designate the entire 6GHz radio band for unlicensed use. This is in line with global trends, as more countries are making large swaths of radio spectrum available for 5G deployment.

However, in order to ensure that the rollout of 5G in Saudi Arabia is done in a way that is safe and compliant with international standards, the government has also laid out a framework for telecoms companies. Under these new regulations, they must adhere to a number of strict security and privacy requirements and are advised of the need to develop disaster recovery plans and ensure that customer data is properly protected.

Information Security & Data Protection

With the rise of cloud computing and the increasing digitisation of society, the issue of information security and data protection is becoming increasingly important. The Saudi government has taken note of this trend and has introduced several regulations aimed at safeguarding consumer data.

Saudi Arabia’s Personal Data Protection Law was implemented by royal decree in 2021. This regulation sets out a number of strict requirements for businesses that process or store personal data.

Among other things, businesses must, in most cases, obtain prior consent from individuals before collecting, using, or sharing their data. They must also ensure that personal data is properly protected and take steps to ensure that any data breaches are promptly reported and resolved. The CITC has also published a set of guidelines on information security, which businesses are encouraged to adopt in order to protect themselves from cyber-attacks.

Competition Law

As Saudi Arabia moves away from its dependence on oil and gas revenues, the need for strong competition laws becomes increasingly important. This is especially true in the context of Vision 2030’s ambitious diversification plans, which are sure to bring new players into many sectors of the Saudi economy.

In late 2019, a new Competition Law was announced by Royal Decree. This new set of regulations is in line with international best practices and designed to ensure that businesses compete fairly, without resorting to anti-competitive practices such as price-fixing, bid-rigging, and illegal market manipulation.

The General Authority for Competition (GAC) has begun to increase its enforcement of competition law in recent years, and this is likely to continue as the Saudi economy becomes more competitive. In 2021, the GAC blocked its first transaction during a merger, signalling a new era of tougher enforcement.

“Competition filing has been a standard part of acquisition and investment transactions relating to Saudi Arabian companies, including technology companies, which have seen an investment boom over the last 2 years. Private equity and, to a certain extent, venture capital, investors and targets must now consider the impact of competition on their intended transactions” stated Abdulrahman Hammad, partner and head of the finance practice at Hammad & Al-Mehdar.

The Changing Future Of Saudi Arabia

The Saudi government’s Vision 2030 is a bold and ambitious plan that is sure to have a major impact on the Kingdom’s economy. While the full extent of these impacts is not yet known, it is clear that businesses will need to be prepared for a number of legal and regulatory changes. From new regulations on 5G and data protection to increased competition law enforcement, businesses will need to adapt in order to stay ahead of the curve.

Older posts
Newer posts