How to Choose Your Saudi Business Activity Code (ISIC): A Foreign Investor's Guide

Motaded Limited Team | 10 min read

The business activity code you select when filing your application with the Ministry of Investment determines everything that follows: the type of license, required capital, additional sectoral approvals, Saudization category, and the scope your company can operate within. An error at this step doesn't just cost you time — it may require a later amendment with additional fees, or push some projects outside the scope of your license.

This article details what the ISIC system is, how the Ministry of Investment uses it, which activities are excluded from foreign investment, common mistakes in selection, and the relationship between activity, capital, and sectoral licensing — with reference tables of actual ISIC4 codes.

The Current Legal Framework

The new Investment Law came into force in February 2025, replacing the Foreign Investment Law of 2000. The substantive changes:

First, a change in legal terminology: what was known as the "MISA License" is now officially "MISA Registration." In practice, many specialists and investors still use the word "license" for clarity, but the official reference and new documents use "registration."

Second, the "Negative List" became known as the "Excluded Activities List." The substance is similar, but the new law provided room for exceptions through special approvals not previously available.

Third, the Ministry of Investment officially adopts ISIC4 (International Standard Industrial Classification, Edition 4) to identify activities permitted for foreign investment. Every commercial activity in the Kingdom has an ISIC code linked to it, and this code determines the conditions that apply to your company.

The Investor Guide Edition 12 (January 2025) is the current official reference for registration procedures, available on the Ministry of Investment website.

What ISIC4 Is and How the Ministry of Investment Uses It

ISIC stands for International Standard Industrial Classification — an international classification system developed by the United Nations to classify every type of economic activity with a unified code. Edition 4 (ISIC4) is the one adopted in Saudi Arabia.

Each activity has a numeric code consisting of multiple levels:

• Section (letter A-R): such as Manufacturing, Construction, Wholesale Trade

• Division (two digits): subdivision under the section

• Group (3 digits): finer specialization

• Class (4 digits): the specific activity

• Saudi National Class (5-6 digits): Saudi adaptation for many activities

The 18 Main Sections in ISIC4 (International Standard):

These 18 sections are internationally standardized. Public administration (Section O) is generally not available for private investment. The rest is open to investment based on your specific activity within the section.

The Ministry of Investment requires you to determine the requested activity on this hierarchy, to identify:

• Whether the activity is fully open to foreign investment

• Whether it requires a specific Saudi partnership ratio

• Whether it falls under additional sectoral regulation (banks, healthcare, education, media, security...)

• What minimum capital is required for this type of activity

The Main Activity Categories — Which Concerns You?

1) Commercial Activity (Wholesale and Retail, Import and Export)

Includes: selling products to end consumers, distributing to dealers, importing and re-exporting, supply chain operations. Commercial activities have higher capital requirements and may require proof of experience in multiple markets before entering the Saudi market. Applies to retail stores, distribution companies, import companies.

2) Industrial Activity (Manufacturing, Transformation, Production)

Includes: manufacturing consumer and industrial products, transforming raw materials, installation and assembly. Industrial activities enjoy government support through the Saudi Industrial Development Fund, customs exemptions on production equipment, and a significant reduction in labor visa fees (work permit fees dropped to SAR 100 for industrial establishments). One of the priority sectors in Vision 2030.

3) Services & Consulting

Includes: management consulting, information technology, training, marketing, logistics services. Consulting activities have lighter capital requirements and are considered easy-entry sectors for the foreign investor. Many first-time companies choose this category due to relative simplicity.

4) Regulated Professions

Includes: law, audit, engineering consulting, healthcare services, education. This category requires additional licenses from the sectoral body after the MISA license: the Saudi Council of Engineers, SOCPA for accounting, the Ministry of Health for medical services, the Ministry of Education for educational establishments. Some professions require Saudi participation (law and audit specifically).

Examples of ISIC4 Codes (4-digit) by Category:

Important note: Saudi Arabia uses an extended national version of ISIC4 with 5-6 digit subdivisions (over 2,800 detailed activities), built on top of the 4-digit international codes above. For the precise Saudi national code for your activity, refer to the National Guide for Economic Activities on the Ministry of Commerce site (mc.gov.sa).

Activities Excluded from Foreign Investment

The current list (Excluded Activities List) includes specific activities that a foreign investor is not entitled to practice with full ownership. The list may change periodically, but what is known includes:

Oil exploration and production. Exploration, prospecting, and production of petroleum substances. There are limited exceptions for mining-related services.

Manufacturing of military equipment. Equipment, devices, military uniforms, and their supplies — a closed sector except by special strategic arrangements.

Hajj and Umrah services. Organizing and managing Hajj and Umrah services is restricted to Saudi entities for regulatory and religious considerations.

Some security services. Security guarding and surveillance services for national security considerations.

Real estate in Makkah and Madinah. Owning real estate in the two holy cities is restricted to Saudi citizens. Real estate investment outside these two cities is available with conditions.

The new law (2025) provided room for exceptions through special approvals in some of these activities. But the general path: review the current list before submitting your application, as changes happen periodically. The Ministry of Investment page on our site is updated by linking to the official misa.gov.sa portal.

Highly Regulated Activities — Requiring Sectoral Approvals

Some activities are open to foreign investment but require an additional sectoral approval after the MISA license. Planning for these approvals from the beginning avoids subsequent delays that may reach months.

Financial sector (banks, financing, insurance, fintech). Saudi Central Bank (SAMA) approval for banks, financing companies, and insurance companies. Capital Market Authority (CMA) for securities and investment funds. Fintech has a special sandbox track.

Healthcare sector. Ministry of Health and the Saudi Food and Drug Authority (SFDA) for health activities, medical equipment, pharmaceuticals. Each activity has its own requirements.

Education. Ministry of Education for schools and universities. Education and Training Evaluation Commission for regulated training activities. Educational activities have strict infrastructure and staff requirements.

Media and communications. Communications, Space and Technology Commission (CST) for telecommunications services. The Media Authority for publishing and broadcasting.

Defense. General Authority for Military Industries (GAMI) for defense activities not completely prohibited, under strict strategic conditions.

Energy. Ministry of Energy and Water and Electricity Regulatory Authority (WERA) for activities related to renewable energy and electricity services.

Real estate. General Real Estate Authority for real estate brokerage and development. Real estate investment funds have a CMA track.

Summary of Additional Sectoral Approvals by ISIC4 Section:

Planning for these approvals in parallel with the MISA application — not after it — saves two to three months in many cases.

Five Common Mistakes in Activity Selection

Mistake one: Registering a narrow activity. A consulting company registers "marketing consulting" only, then discovers after six months that it needs to provide digital design services to its clients. The solution requires amending the activity in MISA + the commercial registration with fees and waiting. Better: registering multiple activities from the beginning to cover your expected expansions in 2-3 years.

Mistake two: Choosing an activity that doesn't match actual work. Registering "wholesale trade" while real work is retail, or vice versa. This creates conflict during audits from ZATCA or the Ministry of Commerce. The two categories are subject to different requirements.

Mistake three: Ignoring the subsequent sectoral license. Assuming the MISA license is sufficient to practice all sector-regulated activities. An engineering company is established with MISA, then discovers it needs the Saudi Council of Engineers license before contracting on any project. Simultaneous planning saves at least two to three months.

Mistake four: Not verifying the current excluded list. Relying on outdated information about the "Negative List." The list changes periodically, and the new law (2025) provided new room for exceptions. Verifying the current list before activity selection is essential.

Mistake five: Choosing an activity without understanding capital requirements. Some activities have a legally defined minimum capital (commercial activities for example). Choosing an activity with insufficient capital leads either to rejection of the application or to commitment to increasing capital later. The setup packages page helps estimate the total cost associated with each activity.

Multiple Activities — When You Need More Than One

Many companies need to register several activities to cover their actual operations. Examples:

A tech company selling software + providing implementation services. Needs two activities: "software sales" + "information technology services." Separating them is tax-important (some IT services have different tax treatment).

A consulting company publishing training materials. Needs: "management consulting" + "training services" + possibly "publishing print materials" depending on format. Each has different regulation.

A commercial company manufacturing part of its products. Needs: a commercial activity (for import and sale) + an industrial activity (for local manufacturing). This opens its access to industrial sector support alongside the distribution activity.

General rule: registering multiple activities at the beginning is much cheaper than adding them later. But don't register activities you won't use — they may create regulatory obligations you don't need.

The Relationship Between Activity, Capital, and Sectoral License

Activity selection affects three connected elements:

1) Minimum capital. Varies by category. Consulting activity requirements are lighter, commercial and industrial activity requirements are higher. Precise figures may change between Investor Guide editions, so we verify them at the time of your application specifically.

2) Sectoral license. The activity determines whether you need approval from an additional sectoral body. Administrative consulting activities don't need it, engineering and health activities do. This adds time and cost.

3) Saudization rate (Nitaqat). Activities have different classifications in the Nitaqat program. A company in the Platinum band enjoys benefits not enjoyed by a company in the Green band. Correct activity selection — combined with correct hiring planning — places your company in a better classification.

These elements are interconnected. Selecting an activity in isolation from the rest may confuse you in the operational stage. Motaded consultation at this early stage shortcuts wrong decisions.

Motaded's Role in Choosing the Right Activity

Many clients come with an idea of "the services they want to provide," not with a ready ISIC code. The Motaded team handles:

• Analyzing your business plan and translating it into the correct ISIC4 codes

• Verifying the current excluded list before submitting the application

• Coordinating obtaining the necessary sectoral approvals (for regulated activities)

• Suggesting additional activities covering your planned expansions

• Ensuring activity matching with your chosen company name in 

commercial name reservation

The initial consultation is free and doesn't require an immediate decision. Book a meeting to discuss your planned activity.

The Next Step

Activity selection is the foundational decision that determines everything that follows. Instead of risking selection from a long list without understanding requirements, book a consultation with our team for precise diagnosis of your activity. The initial consultation costs you nothing, and shortcuts hours of research and decisions that may be wrong. Or review the business setup service page and packages.

Related Pages

Ministry of Investment (MISA)

Saudi Business Center

Why Invest in Saudi Arabia

Free Zones and Special Economic Zones

Commercial Name Reservation

Legal and Administrative Consulting

Business Setup in Saudi Arabia

Setup Pricing Packages