Company incorporation in Saudi Arabia

If you do business in Saudi Arabia there may be a point that it makes sense to set up a local company. Then you need to know how to comply with local regulations and who can help you.

This article describes:

the most likely types of company to set up;
how you do this and who can help you;
a few important fiscal regulations.

Your legal entity in Saudi Arabia

Saudi Arabia, as the largest economy in the Middle East, offers substantial opportunities for foreign businesses across various sectors, including oil and gas, manufacturing, technology, and services. The government has been actively working to diversify the economy and attract foreign investment through initiatives like Vision 2030.

Most Common Business Forms for Foreign Companies

The most common business structure for foreign companies in Saudi Arabia is the Limited Liability Company (LLC).

The Limited Liability Company (LLC) is the preferred business structure for foreign investors in Saudi Arabia. It limits the liability of shareholders to the extent of their capital contribution, offering protection for their personal assets.
Foreign ownership of an LLC is permitted up to 100% in most sectors under certain conditions. In some industries, however, foreign investors are required to partner with a local Saudi national.
LLCs must have at least two shareholders and one director. A majority of the shares can be held by foreign nationals in sectors where 100% foreign ownership is allowed.

An alternative to the LLC structure is the Joint Stock Company (JSC), which can be used for larger businesses. The JSC is suitable for companies seeking public investment, as it allows for the issuance of shares to the public. This structure also allows for 100% foreign ownership in specific circumstances.

Setting Up a Company in Saudi Arabia

Setting up an LLC in Saudi Arabia involves several key steps:

Choosing a company name and ensuring it complies with the Saudi Arabian General Investment Authority (SAGIA) regulations.
Filing the company’s incorporation documents with the Saudi Ministry of Commerce and Investment (MOCI), including the company’s Articles of Association (AoA) and Memorandum of Association (MoA).
Appointing at least one director and the required number of shareholders (a minimum of two). The director can be a foreign national, but a local Saudi partner may be required for certain business activities.
Obtaining a foreign investment license from the Saudi Arabian General Investment Authority (SAGIA), which permits foreign ownership and business activities in the Kingdom.
Registering with the Ministry of Labor and obtaining a commercial registration certificate.
Opening a corporate bank account in Saudi Arabia and depositing the required capital. The minimum capital requirement for an LLC is typically SAR 500,000 (approximately USD 133,000), but this amount can vary depending on the nature of the business.
Registering for taxes and obtaining the required permits from the General Authority of Zakat and Tax (GAZT).

The process of incorporating a business in Saudi Arabia can take several weeks to months, depending on the business structure and the approval process from the relevant authorities. Many foreign businesses work with local experts or consultants to expedite the process and ensure compliance with Saudi regulations.

Taxation and Withholding Taxes

Saudi Arabia offers a competitive tax environment with a corporate income tax rate of 20% on the net income of foreign companies. For local companies with foreign partners, the tax rate is also 20%. There is no personal income tax in Saudi Arabia, which makes it an attractive location for businesses and expatriates.

Regarding dividends:

Dividends distributed to foreign shareholders are subject to a 5% withholding tax, which is generally applicable unless a double taxation agreement (DTA) exists between Saudi Arabia and the shareholder’s country.
Saudi Arabia has signed DTAs with numerous countries, which can help reduce or eliminate withholding taxes on dividends and other income.

Service Providers for Company Incorporation

These service providers can assist with the entire company formation process, including legal documentation, regulatory compliance, tax registration, and ongoing business operations in Saudi Arabia.

Convince potential distributors

A local consultant can find possible business partners, or you have identified them yourself. But how to convince them to market and sell your products or services?

For this you need an export plan with a clear strategy and sufficient financial details.

Get funding from banks & investors

Entering a new market is an investment. Finding partners, contracts, translations and marketing costs money and you may need additional working capital.

Only with a good plan with enough financial data you can convince banks and investors to fund you. We help you with the complete business case and documentation.