Business Setup in Saudi Arabia: All You Need to Know

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The KSA (Kingdom of Saudi Arabia) is the world’s largest oil exporter and producer. It also controls the second-largest hydrocarbon reserves. In the global market, the major contributors of leading business firms are from KSA. If we consider the global situation right now, then there are significant opportunities for businesses to grow in the Middle East.

Before you start planning your business in Saudi Arabia, it’s important to understand key aspects like taxes, laws, regulations, and financing to ensure a smooth setup process. It might be difficult or a complex task for expats, but with us, you will get proper assistance during your business setup process in KSA.

Here’s a comprehensive guide on setting up a business in Saudi Arabia, let’s get started!

Key points

Some of the most important points regarding KSA are as follows:

  • Kingdom of Saudi Arabia is one of the largest Arab states, founded in 1932. It is known as the heart of the Islamic world and one of the Middle East’s wealthiest nations.
  • Due to the strategic location of KSA, it connects with Europe, Africa, Asia, and almost most of the entire world, which makes it a hub for business globally.
  • The economy of KSA experiencing a 4% growth rate annually throughout the past seven years and will continue to the future for sure, allowing investors to move to Saudia Arabia to start their businesses.
  • Saudia Arabia is facilitating the business ecosystem by making enormous efforts that support new business setup and business activities in a wide range of business sectors.
  • This Arab country accounts for 20% of the registered oil reserves in the whole world. The sector of oil accounts for budget revenues of 80%, GDP of 45%, and export revenues of 90%.
  • In Dec 2005, KSA entered World Trade Organization. The entry of KSA into WTO leads its government to carry out diversification, and promotion of investors, especially foreign investors, and other economic reforms are now also carried out.
  • The law on foreign investments offers foreigners to invest and carry out different business activities, except the sectors that are on the negative list.

Benefits of setting up business in Saudi Arabia

Saudi Arabia is offering a very welcoming business environment in comparison to others. In the world bank’s business index, Saudia Arabia is ranked 62 out of 190 plus countries. That is why KSA is far ahead of other countries such as Oman and Qatar and includes business hubs such as Luxembourg in terms of ease of doing business.

The tax system here in Saudia is also very much favourable to attract foreign investors. KSA moving away from an oil-reliant economy means it provides more significant support and resources available for different business sectors.

The most prominent benefits that Saudi Arabia provides to its investors and foreigners that want to start their business are:

  • 100% foreign ownership.
  • Low crime rate with quality living, including maintained standards for healthcare and education.
  • Low minimum capital requirements.
  • No restrictions on capital repatriation.
  • The perk of protecting all the personal assets & property.
  • Global access to investments within the KSA, as in 2005 KSA joined the world trade organization.
  • Allowance of sponsoring foreign workers.
  • More tax advantages if companies are in less developed areas.

Types of companies in Saudi Arabia

The MOI (Ministry of Investment) of KSA seeks to facilitate all foreign companies by establishing legal entities. These legal entities such as:

  • LLC (Limited liability Companies)
  • JSC (Joint stock company)
  • SPLLC (Sole proprietorship Limited liability company)
  • LLP (Limited partnership company)

Limited liability companies

LLC is famous in almost all the gulf countries and very popular in the KSA market for company establishment. The owner gets no liability in this type as against the company debt. However, in simple words, LLC is a business structure in KSA that helps the owner to protect from business liability and debts.

Joint-stock company

JSC is the most regulated type of company in KSA. The regulation proceeded through requirements for incorporation and degree of involvement of MOCI (Ministry of Commerce and Industry). JSC’s liability lies with every shareholder according to their divided equal value share.

Sole proprietorship limited liability company

An SPLLC is also a liability company and is always owned by only one person. That means that the owner is responsible for all the profits as well as for the debts and liabilities of the business.

Limited partnership company

It is entitled to limited partners that can make investments in the business but cannot make operational decisions or any other kind of personal or company liabilities under this type. Also, more than one partner can create a limited liability partnership.

Joint ventures are a way of business arrangement where more than one party can agree to make the pool of their resources to accomplish a specified task. Also, two other types of businesses for foreign investors are available in KSA such as representative offices and branch offices.

Steps to start a business in Saudi Arabia

If you are interested in starting your business setup in Saudi Arabia, then the first thing you should do is book a free consultation with our Emirates Business Setup team specialist. We offer business setup services in UAE or other GCC countries. Our business consultants help you gain information regarding your business formation and set up process and other proceedings according to the country’s customs and the law. The process is straightforward.

Let’s discuss all the steps that are required for setting up your company here in Saudia Arabia:

Step # 1. Choose the right industry and business structure.

The first thing is that as a business owner, you must outline the industry and all the activities regarding that industry you intend to work in. You will get an idea about the best business setup type for your needs. If you want to start your business in the free economic zone or the mainland of Saudia, it will also help us dictate your requirements for legal entities and the type of business trade license you require. Saudi Ministry of Commerce approval is initially needed before starting your business process. Additionally, proof of having enough funds and the capability to invest in starting your business may also be required.

Step # 2. Registration of company name.

The next step is to choose your company name and register it. There are many factors regarding name selection in KSA, such as the name of your company must be unique, not be copied from your competitors, and not be offensive or blasphemous to any religion.

Step # 3. Submit all required documents.

You can apply for your license and start your business in Saudi Arabia at this step. However, a complete application form with a business plan and other requested documents needs to be submitted. The documents that are required are as mentioned below:

  • ID cards of all shareholders, if any.
  • Passport Copies of all shareholders or directors.
  • Memorandum of Association (MOA)
  • Bank reference letter
  • Articles of Association (AOA)
  • Copy of your company name registration

Also, a business visa will require you to work, live and reside in KSA. Emirate Business Setup is here for you to manage all your process, you can contact us.

Business setup services in Saudi Arabia

Emirates business setup is based on helping entrepreneurs with all the legal proceedings within the jurisdiction to start their business setup in KSA. Additionally, Emirates Business Setup is expanded to Europe and Middle East as well. We are providing business setup services in UAE as well as other GCC countries. We provide ultimate solutions to every problem you might face during your process.

There is a wide range of services that Emirates Business Setup offers to foreign investors in KSA, including:

Conclusion

In this article, we have discussed all the benefits of setting up your own business in Saudi Arabia, how the process works, and the types of companies you can choose from. Saudi Arabia is no doubt emerging as an upcoming business hub. It might get difficult to open your business and then strictly follow the rules and regulations of that particular country on your own. We always advise our clients to first visit the country and make sure themselves before taking any step forward.

Frequently Asked Questions

How much does it cost to start a business in Saudi Arabia?

Starting a business in Saudi Arabia varies in cost depending on factors like licensing fees, office space, and legal expenses. Budgeting for setup and ongoing expenses is recommended before starting the process.

What is the corporate tax rate in Saudi Arabia?

Corporate tax in Saudi Arabia for foreign investors is up to 20% on annual profits.

Can a foreigner set up a business in Saudi Arabia?

Yes, foreigners can start businesses in Saudi Arabia by following the process, including submitting documents, obtaining licenses and leasing office space.

Can I set up a business in Saudi Arabia as a UAE resident?

Anyone can set up a business in Saudi Arabia either you are a UAE resident or from anywhere else in the world.

What are some popular businesses in Saudi Arabia?

Popular businesses in Saudi Arabia include but are not confined to cargo and courier services, travel and tourism, renewable energy, language services, and recruitment agencies.

Which sectors offer high profit potential in Saudi Arabia?

Sectors like real estate, technology, healthcare, education, and luxury goods offer significant profit potential due to market demand and government initiatives.