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GOSI Contribution Calculation: Overview

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Table of content

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Table of content
1 GOSI Contribution Calculation: Overview
1.1 GOSI Contribution Calculation: Housing Base
1.2 GOSI Contribution Calculation: Basic Monthly Salary
1.3 GOSI Contribution Calculation: Employee Age
1.4 GOSI Contribution Calculation: Example

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1 GOSI Contribution Calculation: Overview


The system calculates an employees GOSI-applicable earnings based on the following criteria:
Criterion

More Information

The employees housing allowance earnings and, related to this point, the employees
marital status and the residence status of an employees dependents.

GOSI Contribution Calculation: Housing Base

The employees basic monthly salary in January or in the month of hire and, related to
this point, the employees nationality and whether the employee works in the public or
private sector.

GOSI Contribution Calculation: Basic Monthly Salary

The employees age.

GOSI Contribution Calculation: Employee Age

Implementation Considerations
You make the required customizing settings in Customizing for

Payroll: Saudi Arabia

Social Insurance

Integration
The system stores the GOSI basic salary in the GOSI-applicable earnings wage type, /370. The system cumulates GOSI-applicable earnings in cumulation
class 02. The annual cumulated amount for GOSI-applicable earnings is stored in the cumulation table (CRT).

Example
For a detailed example of the GOSI contribution process, see GOSI Contribution Calculation: Example.

1.1 GOSI Contribution Calculation: Housing Base


The GOSI-applicable earnings are stored in /370, which is the sum of the GOSI calculated earnings (/372) and the GOSI-calculated housing base (/660).
This topic explains how the value of /660 is determined.
Depending on the circumstances of an employee, an employees housing allowance or, more commonly, an employee's company-provided housing, can be a
factor in determining the employees GOSI-applicable earnings. The housing-related part of an employees GOSI-applicable earnings is called the housing
base (HB).

Company-Provided Housing
The following figure shows how company-provided housing affects the calculation of housing base of an employees GOSI-applicable earnings:

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How the System Considers Company-Provided Housing in the Calculation of GOSI-Applicable Earnings

The system checks whether the Housing Allowance auto (M710) wage type is registered in the Recurring Payments/Deductions (0014) infotype and proceeds
in the following way:
If the Housing Allowance auto (M710) wage type is registered in the Recurring Payments/Deductions (0014) infotype, the system checks the marital
status of the employee in the Personal Data (0002) infotype.
If the employee is single, the system calculates the housing base as follows:
Housing base equals (Basic Monthly Salary multiplied by the value of constant HOUSS) divided by the value of constant SIAP2.
If the employee is married, the system checks the Personal Data (0002) infotype and determines whether the Family Resides in Saudi Arabia
checkbox is selected.
If the Family Resides in Saudi Arabia checkbox is not selected, the system calculates the housing base as follows:
Housing base equals (Basic Monthly Salary multiplied by the value of constant HOUSS) divided by the value of constant SIAP2.
If the Family Resides in Saudi Arabia checkbox is selected, the system calculates the housing base as follows:
Housing base equals (Basic Monthly Salary multiplied by the value of constant HOUSM) divided by the value of constant SIAP2.
If the Housing Allowance auto (M710) wage type is not registered in the Recurring Payments/Deductions (0014) infotype, the system checks the
Personal Data (0002) infotype to see whether the No Company Housing checkbox is selected. The system then proceeds as follows:
If the No Company Housing checkbox is selected, the system does not include a housing base in the calculation of GOSI-applicable earnings.
If the No Company Housing checkbox is not selected, the housing base is calculated as follows:
Housing base equals (Basic Monthly Salary multiplied by the value of constant SIAP1) divided by the value of constant SIAP2.
The final calculated housing value is stored in /660.

Housing Allowance Paid as Cash to Employee

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In accordance with Saudi Labor Law (based on the legal change announced in February 2015, in SAP Note 2128152
amount to the employee as a housing allowance, the following process occurs:

), if the organization pays a cash

1. The Housing Allowance Advised (M715) wage type is registered in the Recurring Payments/Deductions (0014) infotype.
2. During the housing allowance calculation, in rule SAV9, the system calculates the minimum housing allowance stipulated by GOSI using constant HOUMN.
3. The system then compares the cash value in M715 with the minimum housing allowance and uses the larger of the two, by moving the value to /660.

More Information
GOSI Contribution Calculation: Overview

1.2 GOSI Contribution Calculation: Basic Monthly Salary


By law, the part of an employees GOSI-applicable earnings that come from the January or hiring months basic monthly salary (BMS) depends on the
employees nationality and whether the employee works in the public or private sector. Saudi Arabia has the following types of social insurance contribution
categories, each with unique contribution rates:

Category I: Saudi nationals, private and public sector


Both the employee and employer contribute a percentage towards the annuity branch. The employer contributes an additional percentage for occupational
hazards. The total contribution is the sum of these three inputs.

Caution
In the following table, the provided contribution rates for Saudi nationals are subject to legal change at any time.

Nationality

Annuity Branch Annuity Branch Unemployment Unemployment


Retirement: ER
Retirement: EE
Contribution ER Contribution EE
Share
Share
Share
Share

Occup. Haz.: ER Total


Share

Min. Base in
SAR

Max. Base in
SAR

Saudi Arabia

9%

2%

1,500

45,000

9%

1%

1%

20%

Note
A legal change, due to come into effect from September 2014, requires an unemployment contribution from affected employees and employers as part of the
Saned Insurance scheme. For details about this legal change and how it affects the GOSI contribution calculation in the system, refer to SAP Note 2018958
.

Category II: GCC nationals, excluding Saudi nationals

Caution
In the following table, the provided contribution rates for non-Saudi GCC nationals are subject to legal change at any time.

Nationals

Annuity Branch: ER
Share

Annuity Branch: EE
Share

Occup. Haz.: ER
Share

Total

Min. Contributory
Wage

Max. Contributory
Wage

Bahrain

Private Sector: 9%

Private Sector: 6%

2%

Private Sector: 17%

Not specified under law

Private Sector: BHD

Public Sector: 9%

Public Sector: 15%

Private Sector: 9%

Private Sector: 11%

4,000
Public Sector: 26%

Public Sector: Not


specified under law

UAE

2%

Private Sector: 22%

Not specified under law

Not specified under law

Not specified under law

Private Sector: OMR


3,000

Public Sector: Not


specified under law
Oman

Private Sector: 9%

Private Sector: 7%

Public Sector: 9%

Public Sector: 13%

Private Sector: 9%

Private Sector: 9.5%

Public Sector: 9%

Public Sector: 9.5%

Private Sector: 9%

Private Sector: 6%

Public Sector: 9%

Public Sector: 6%

2%

Private Sector: 18%

Public Sector: 25%

Public Sector: Not


provided

Kuwait

Qatar

2%

Private Sector: 20.5%

KWD 230

KWD 2,750

Not specified under law

Not specified under law

Public Sector: 20.5%


2%

17%

Note
For Saudi and GCC nationals, in the case of a midyear hire, an employees initial basic monthly salary and housing allowance earnings are used to calculate
an employees GOSI-applicable earnings.
If the calculated monthly GOSI-applicable earnings exceed the maximum contributory wage or is less than the minimum contributory wage, the system uses
the maximum or minimum amount as the contribution base to calculate GOSI contribution.

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Category III: Expatriates (non-GCC nationals)

Caution
In the following table, the provided contribution rates for non-GCC expatriate employees are subject to legal change at any time.

Nationals

Foreign employees
(expatriates) other than

Annuity Branch: ER

Annuity Branch: EE

Share

Share

Not Applicable

Not Applicable

Occup. Haz.: ER Share

Total

Max. Contributory Wage

2%

2%

SAR 400

GCC nationals

More Information
GOSI Contribution Calculation: Overview

1.3 GOSI Contribution Calculation: Employee Age


The salary increase percentages that an employee receives between ages 45 and 50 affect the calculation of GOSI-applicable earnings when the employee
turns 50 and older.
The following figure shows how salary increase percentages, together with the age of an employee, affect the calculation of GOSI-applicable earnings:

System Process for Calculating GOSI-Applicable Earnings for Employees Aged 50 and Over

1. The system checks the salary increase that was awarded to an employee when the employee is 50 years old.
2. Depending on the increase percentage, the system takes the following action:
If, at age 50, an employee receives a salary increase greater than 10% of the salary at age 49, the salary from which the GOSI-applicable earnings
are calculated is capped at 110% of the employees salary before the increase was granted. For example, even if an employee who is 50 receives
an increase of 30% (that is, 30% higher than the salary at age 49), the GOSI-applicable earnings at age 50 and over are limited to 110% rather than
130% of the salary at age 49.
If, at age 50, an employee receives an increase lower than 10% (constant GO50L), the system takes the following steps:
1. The system compares the salary at age 50 to the salary at age 45.
2. The system determines whether the salary at 50 is more or less than 150% (constant GO505) of the salary at 45 and proceeds as follows:
If the salary at 50 is less than 150% of the salary at 45, the GOSI-applicable earnings at 50 and later are based on the January salary of
the year when the employee turns 50.
If the salary at 50 is greater than 150% of the salary at 45, the GOSI-applicable earnings at 50 are limited to 150% of the salary at 45.

Integration
To see how the described calculations are made in the system, refer to subschema SIAC and personnel calculation rules SA35 and SA29.

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Note
Rule SA29 checks the Hijri calendar age of an employee before triggering rule SA39. Rule SA39 adjusts the GOSI-applicable earnings (wage type /370)
when the employees Hijri age is 49.

More Information
GOSI Contribution Calculation: Overview

1.4 GOSI Contribution Calculation: Example


The following scenario shows how the system calculates (GOSI)-applicable earnings at various milestones during the life cycle of a typical employee.

Caution
The scenario is fictitious in nature and is provided for illustrative purposes only. Calculations in the system are employee-specific.

Scenario
Khaled is hired by the ABC Company in March 2012.

Personal Details
Khaleds personal circumstances are as follows:
He is a Saudi national
He is married
His family lives with him

March 2012
When Khaled is hired in March 2012, his salary details are as follows:
Component

Amount in SAR

Basic Monthly Salary

8000

Housing Benefit

8000 x 3 / 12 = 2000

GOSI-applicable earnings in wage type /370

8000 + 2000 = 10000

Based on the specified basic monthly salary percentages for GCC nationals and housing base calculations, the contribution breakdown of this 10000 SAR is
detailed in the following table:
Contribution

Amount in SAR

Employer Annuity Branch

10000 x 9% = 900

Employee Annuity Branch

10000 x 9% = 900

Employer Occupational Hazards

10000 x 2% = 200

Employer Unemployment Contribution

10000 x 1% = 100

Employee Unemployment Contribution

10000 x 1% = 100

Therefore, the final breakdown is as follows:


Description

Amount in SAR

Total Employer Contribution

1200

Total Employee Contribution

1000

Khaleds net pay assuming that no other deductions, such as loan repayments, are
made

100001000 = 9000

April 2012 to December 2012: No Change to Khaleds Salary


GOSI-applicable earnings are calculated either during the month of hire or every January. Because Khaled was hired in March, his GOSI-applicable earnings
and the associated contribution amounts remain unchanged from March through to the end of December 2012. The GOSI-applicable earnings wage type (/370)
that was used in the March 2012 payroll continues to be used from April through to December.

January 2013: No Change to Khaleds Salary


Khaled does not receive a salary increase in 2013. Therefore, when the system recalculates his GOSI-applicable earnings in January 2013, the contribution
amounts remain unchanged.
Although Khaled earns the same amount of money in January 2013 as he earned in March 2012, the GOSI-applicable earnings wage type (/370) now reflects

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the January 2013 payroll run rather than the March 2012 payroll run.

March 2015: Khaled Receives a Salary Increase


In March 2015, Khaled receives his first salary increase since joining the ABC Company . His new earnings are as follows:
Component

Amount in SAR

Basic Monthly Salary

10000

Housing Benefit

10000 x 3 / 12 = 2500

GOSI-applicable earnings in wage type /370

8000 + 2000 = 10000

Even though Khaled received a salary increase, his GOSI-applicable earnings amount remains unchanged. This is because the GOSI-applicable earnings
amount is recalculated only in January or in the month of hire. So, in Khaleds case, his GOSI-applicable earnings will not be recalculated until January 2016.

January 2016: Khaleds GOSI-Applicable Earnings Amount is Recalculated


Because GOSI-Applicable Earnings amounts are recalculated every January, the system adjusts Khaleds figures as follows:
Component

Amount in SAR

Basic Monthly Salary

10000

Housing Benefit

10000 x 3 / 12 = 2500

GOSI-applicable earnings in wage type /370

10000 + 2500 = 12500

Based on the specified basic monthly salary percentages for GCC nationals and housing base calculations, the contribution breakdown of this 12500 SAR is
detailed in the following table:
Contribution

Amount in SAR

Employer Annuity Branch

12500 x 9% = 1125

Employee Annuity Branch

12500 x 9% = 1125

Employer Occupational Hazards

12500 x 2% = 250

Employer Unemployment Contribution

12500 x 1% = 125

Employee Unemployment Contribution

12500 x 1% = 125

Therefore, the final breakdown is as follows:


Description

Amount in SAR

Total Employer Contribution

1500

Total Employee Contribution

1250

Khaleds net pay assuming that no other deductions, such as loan repayments, are

125001250 = 11250

made

January 2020: Khaled Turns 45 Years Old (Gregorian Calendar) / 44 Years Old (Hijri Calendar)
When Khaled turns 45 years old by the Gregorian calendar, or 44 years old by the Hijri calendar, the GOSI-applicable earnings wage type changes every
January in line with Khaleds birthday:
Date

Khaleds Age (by Gregorian Calendar)

Changes to GOSI-Applicable Earnings Wage Types

January 2020

45

/370 to /375

January 2021

46

/375 to /376

January 2022

47

/370 to /375
/376 to /377
/375 to /376
/370 to /375
January 2023

48

/377 to /378
/376 to /377
/375 to /376
/370 to /375

January 2024

49

/378 to /379
/377 to /378
/376 to /377
/375 to /376
/370 to /375

Note
For more information about these wage types, in table V_512W_D, refer to the relevant wage type documentation by choosing the

( Information )

pushbutton.

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Recommendation
In this example, Khaled has worked for the ABC Company throughout his forties and into his fifties. Therefore, the system can automatically retrieve his
salary information from when he was 45, 46, 47, 48, and 49. However, if an employee in your organization worked for another organization for part or all of the
period between ages 45 and 50, we recommend that you maintain the employees salary for those years manually in the appropriate wage types.

January 2025: Khaled Turns 50 Years Old (Gregorian Calendar) / 49 Years Old (Hijri Calendar)
If Khaled receives a salary increase when he turns 50 years old by the Gregorian calendar, or 49 years old by the Hijri calendar, his GOSI-applicable earnings
amount can be affected by the calculation logic for employee age. The following examples show how the salary increase percentage affects his GOSI-applicable
earnings amount:
Example 1: Khaled Receives a 20% Salary Increase
In January 2025, Khaled receives a 20% salary increase, so, using the calculation logic for employee age, the system adjusts his figures as follows:
Component

Amount in SAR

Basic Monthly Salary

12000

Housing Benefit

12000 x 3 / 12 = 3000

GOSI-applicable earnings in wage type /370

15000 SAR, because Khaleds salary at age 50 is less than 150% of his salary at 45.

Based on the specified basic monthly salary percentages for GCC nationals and housing base calculations, the contribution breakdown of this 15000 SAR is
detailed in the following table:
Contribution

Amount in SAR

Employer Annuity Branch

15000 x 9% = 1350

Employee Annuity Branch

15000 x 9% = 1350

Employer Occupational Hazards

15000 x 2% = 300

Employer Unemployment Contribution

15000 x 1% = 150

Employee Unemployment Contribution

15000 x 1% = 150

Therefore, the final breakdown is as follows:


Description

Amount in SAR

Total Employer Contribution

1800

Total Employee Contribution

1500

Khaleds net pay assuming that no other deductions, such as loan repayments, are

150001500 = 13500

made

Example 2: Khaled Receives a 60% Salary Increase


In January 2025, Khaled receives a 60% salary increase, so, using the calculation logic for employee age, the system adjusts his figures as follows:
Component

Amount in SAR

Basic Monthly Salary

16000

Housing Benefit

16000 x 3 / 12 = 4000

GOSI-applicable earnings in wage type /370

18750 SAR because Khaleds salary at age 50 is more than 150% of his salary at 45,
and is therefore capped at 150% of the amount of wage type /379.

Based on the specified basic monthly salary percentages for GCC nationals and housing base calculations, the contribution breakdown of this 18750 SAR is
detailed in the following table:
Contribution

Amount in SAR

Employer Annuity Branch

18750 x 9% = 1687.50

Employee Annuity Branch

18750 x 9% = 1687.50

Employer Occupational Hazards

18750 x 2% = 375

Employer Unemployment Contribution

18750 x 1% = 187.50

Employee Unemployment Contribution

18750 x 1% = 187.50

Therefore, the final breakdown is as follows:


Description

Amount in SAR

Total Employer Contribution

2250

Total Employee Contribution

1875

Khaleds net pay assuming that no other deductions, such as loan repayments, are

20000 1875 = 18125

made

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March 2030: Khaled is Terminated


Whether Khaled and the ABC Company must make GOSI contributions during the month when Khaled is terminated depends on when in the month the
termination takes place.
If Khaled is terminated before 31 March, no GOSI contributions are made.
If Khaled is terminated on 31 March, GOSI contributions are made.

More Information
GOSI Contribution Calculation: Overview

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