Steps for a Business Setup in Saudi Arabia As A Foreigner

Several fundamental steps exist when forming a new corporation in Saudi Arabia. Starting a business is a significant process involving regular interactions with common but potentially tricky concerns, such as funding, legislation, liability protection, human resources, intellectual property, and taxes. Business setup in Saudi Arabia is not just about trading with clients but also establishing a correct organizational structure to ensure legal compliance.

Saudi Arabia is eager to diversify its oil and gas, much like the UAE. And this diversification is anticipated to happen quickly. Over the past year, Saudi Arabia’s taxes on individuals has not seen any substantial changes (i.e., there remains no individual income tax regime).

The Government of Saudi Arabia welcomes foreign investors with open hands. The support from Government bodies and business setup consultants in Dubai makes it a better place to set up a new business. Also, if your product or service will strengthen the regional economy, regardless of your industry, you can anticipate a welcoming and helpful business environment in Saudi Arabia.

Can I own a business in Saudi Arabia as a foreigner?

An investment license is necessary if you are a foreigner seeking company formation in Saudi Arabia. The Saudi Arabia General Investment Authority is the issuer of this (SAGIA). Hence, you can invest in the nation by establishing a branch office of your foreign company.

How long does it take in Saudi Arabia to form a company?

In Saudi Arabia, opening an account takes longer than in other countries. Opening a capital account can take up to 5 weeks and changing it to an active bank account can take up to 8 weeks. The process of issuing bank account numbers could take three months.

What is the process of company formation in Saudi Arabia?

The process of company formation in Saudi Arabia is relatively easy and affordable.

Follow the below steps to set up a company in Saudi Arabia:

Apply for a license

You must apply to SAGIA/MISA to get an investment license.

Make sure you have the following documents on hand to go through with the same:

• A board decision outlining the intention to invest in Saudi Arabia
• Another resolution defining the investment strategy and its implications for the economy
• a statement outlining the investor’s capacity to fund operations

Make the payments

Obtaining a business license from MISA is essential since it will give your business 100% foreign ownership and the ability to operate anywhere in Saudi Arabia. However, the license type varies depending on the International Standard Industrial Classification and your company’s economic activity in Saudi Arabia (ISIC). In Saudi Arabia, obtaining a company license entails three steps and takes five working days to complete.

Trade name and business activity registration

The Saudi Arabian Ministry of Commerce and Industry oversees the business setup in Saudi Arabia. The name of the new Saudi organization shall be in Arabic. It must adhere to local naming laws.

Activate Chamber of Commerce

The Chamber of Commerce must certify several official processes and papers. After activating the account, almost all Chamber of Commerce procedures can be completed online.

If an authorized signatory signs a PoA from the parent firm, the Chamber of Commerce account will be enabled. However, work permits and visas require registration with the Ministry of Labor (MoL).

Attestation of documents

The documents listed below must be attested by the Saudi Embassy and the Ministry of Foreign Affairs.

• A financial statement for the last year
• Trade permit (or equivalent)
• Memorandum of Association Notarized Power of Attorney (PoA) from a public notary

Registration with GOSI and Tax authority

There are specific procedures that you have to follow in order for your legal business to be permitted to employ individuals. It includes registering with the Ministry of Labor (MoL), the General Organization of Social Insurance (GOSI), and the Tax Authority or ZAKAT. At this stage, your General Manager (GM) could also receive a one-time GM visa, enabling them to visit KSA.

Opening a bank account

All businesses operating in Saudi Arabia must register with a bank and open their corporate bank accounts to work towards successfully launching their business.

Register your physical office location

You must register and keep a physical office address in Saudi Arabia if you wish to start a business there. Get a municipal business location license, then register with the post office. Investors can speak with one of our staff for further information on the registration of a branch office.

Once the above has been sorted, your business may operate in full swing.

Registration of the appointed manager at COC

All regional businesses rely primarily on the Chamber of Commerce (CoC) as a powerful platform. Most tasks can be completed online if you have an active account. Within thirty days of the date the notary public records the company’s articles of association, the managers of companies established in the Kingdom must submit an application for registration in the Commercial Register.

According to the Manual of the Ministry of Investment Services, investment is permitted in all domains except:

• Oil exploration, drilling, and production
• Products and services custom-made to the military
• Security and private investigation services
• Investment in Makah and Medina real estate
• Hajj-related tourism orientation and guidance services
• Recruitment services
• Fishing and maritime hunting resources

The Ministry of Investment produced a handbook on investment in 2020 to outline the processes and conditions for issuing all applicable government permits to foreign business enterprises. The document details and includes information on how foreigners may create a business. The Ministry of Investment has also indicated that business operations are subject to laws and limits.

Aspects to Consider When Establishing a Business in Saudi Arabia

In many ways, Saudi Arabia’s business regulations are comparable to those of western nations. Hence, a business owner may, for instance, operate the firm as a private entity or in various ways. Although you have the option to select how to start a business, you should not be irresponsible when establishing its legal foundation. Professional legal counsel and direction will assist you in navigating regulatory hurdles.

Cultural differences

Company formation in Saudi Arabia has gotten simpler over the years, but cultural differences and linguistic barriers still pose significant obstacles.

You will learn how to establish a business if you thoroughly understand the area. It is a rule of thumb that applies anywhere around the globe, including Saudi Arabia. Attempt to study the industry in which your business works exhaustively. A strong business strategy must also thoroughly grasp the target market, applicable government rules, and the competition. Operating a new business in a foreign country is not simple, but an effective marketing strategy might attract locals and government backing.

Early business partnerships with the community

As per the Saudi government, at least one local partner with a majority stake in the company was mandatory. Thankfully, this limitation no longer applies. Thus, a foreigner may be the sole owner of a business. But, this does not invalidate the benefits of having a local partner. A business setup consultant in Saudi Arabia who understands the local business scene may be a great addition to the firm.

Evidence of financial capability

The proprietor must provide a bank statement as soon as a business is officially registered with the Ministry of Commerce. The procedure is somewhat intricate, and you must engage a professional to assist you with the process. Make sure you hire a business setup consultant with a solid track record in Saudi Arabia.

Types of business entities in Saudi Arabia

The New Companies Regulations provide the following types of companies in Saudi Arabia, available for both local and foreign business people:

• joint liability company;
• ​establishment/sole proprietorship;
• limited partnership company;
• joint venture;
• joint stock company;
• limited liability company.

Foreign businesses can choose from three different structures for company formation in Saudi Arabia. Each of these business structures has particular benefits and drawbacks, as well as varying requirements for minimum capital, registration procedures, and the range of permitted business operations. Hiring business setup consultants in Saudi Arabia for better advice is best.

Associated Company

An LLC must have a minimum of SR 500,000 in capital, 2 to 50 owners, and one or more managers to oversee and represent the interests of the shareholders. Although shareholders frequently include a board and other management arrangements in the memorandum of association, there is no board of directors. A limited liability corporation, in particular, is permitted to carry out the complete spectrum of operations consistent with the firm’s approved objectives and to work on public and private projects.

Branch office

Within the bounds of its license, the branch office may conduct business. Like in most nations, the parent business will bear full responsibility for all actions made by the branch office. Hence, the branch may also advertise and seek companies in Saudi Arabia. Due to the lack of required reserves and the need for authorized articles of association, the formation process is typically more straightforward than for a company.

Representative office

Technical and Scientific Offices (TSOs) and Temporary Company Registrations are acceptable equivalent offices under Saudi legislation (TCRs).

For example, a TSO solely acts as a middleman between a foreign company and the local market (and a Saudi distributor). However, a TCR may carry out the contract work activities but can’t engage in further or general commercial marketing (es). To build a diverse, robust, and future-proof economy, the nation’s leaders are providing billions of dollars in support to companies operating across various industries. Tourism, manufacturing, technology, financial services, cosmetics, and pharmaceuticals are among the businesses that are expanding.

Professionals can assist enterprises in company formation in Saudi Arabia. The first stage in providing a satisfying service is learning and comprehending the nature of the client’s business. Also, we specialize in tailor-made solutions by utilizing our extensive understanding. You can hire a reliable business setup consultant in Saudi Arabia to make the process hassle-free and free of errors. From helping you with your Visa to doing all the paperwork, they will help you stay at the top.