Setting up a company in Saudi Arabia can be a dream come true for many, thanks to the Saudi government's introduction of business-friendly policies. However, a foreign investor or an entrepreneur needs to follow a few procedures as per the rules and regulations set by the authorities.
Types of Corporate Formations in Saudi Arabia
Before diving into the process of setting up a company in Saudi Arabia (KSA), it’s important to understand the different types of company formations allowed in the country. There are five main types:
- Joint Liability Companies
- Limited Partnership Companies
- Joint Ventures
- Joint Stock Companies
- Limited Liability Companies (LLC)
Among these, LLC, also known as a subsidiary company, is favored by foreign investors due to its higher risk aversion, greater flexibility, and overall registration and funding simplicity for setting up a company in Saudi Arabia.
Understanding the Tax System for setting up a company in saudi arabia
Saudi Arabia offers a relatively straightforward tax system for setting up a company in Saudi Arabia. The main taxes include:
- Corporate Income Tax: Applied at a flat rate of 20% on non-Saudi or GCC company profits.
- Withholding Tax: Payments made to non-residents range from 5% to 15%.
- Value-Added Tax (VAT): Currently set at 15%, VAT applies to most goods and services.
Exemptions are available for certain sectors, particularly those aligned with Vision 2030, such as renewable energy and technology, for setting up a company in Saudi Arabia.
Read more about Saudi Vision 2030: A Game-Changer for Business Setup in Saudi Arabia.
Benefits of Setting Up a Company in Saudi Arabia
- Streamlined and largely online business setup procedures
- Stable and secure social and commercial environment
- Access to world-class infrastructure and lifestyle amenities
- Attractive government incentives and tax advantages
- Top-tier commercial spaces.
- Strategic global position for ease of transactions.
Setting Up a Company in Saudi Arabia
If you’re setting up a company in Saudi Arabia, here are the key steps and best practices you should follow for setting up a company in Saudi Arabia
Apply for an Investment License
The first and most essential step is obtaining an investment license from the Saudi Arabia General Investment Authority (SAGIA), now part of the Ministry of Investment (MISA). This license is mandatory for foreign investors to legally operate in the Kingdom.
SAGIA will provide you with a unique number that you will need to register your business and get certified by the Chamber of Commerce.
Once approved, you’ll receive a unique registration number needed to proceed with business registration and Chamber of Commerce certification.
The above-mentioned certificate is required for you during the time of setting up a company in Saudi Arabia and also while you try to open a corporate bank account for your business.
Notarize Company Documents
Notarization is a required step in setting up a company in Saudi Arabia. Fortunately, this can be completed online, saving both time and effort. Make sure to have the following documents prepared for notarization:
- Approved AoA document.
- License copy from SAGIA.
- Color photographs of all shareholders and directors.
- All the shareholders and directors sign a consent.
- Passport and ID copies for all shareholders and directors
- All relevant corporate documents, including shareholder-related papers
Publish in the Official Gazette
Next, publish your company’s details in the official gazette. This publication should include:
- All approval certificates from relevant authorities.
- The name of the company.
- AoA information.
Open a Corporate Bank Account
A corporate bank account is essential for managing your business finances. It’s also required to pay government fees during the company setup process.
Rent or Lease Office Space
Office space is mandatory to register your official business address. Once you have secured a physical location, you can apply for a municipal license, which is crucial for setting up a company in Saudi Arabia.
Obtain a Commercial License
This is the final thing to be done. Compile all the documents and approvals obtained so far and submit them to the Commercial Registry Department of the Ministry of Commerce and Industry in Unified Center, KSA.
This final approval from the authority will make your company legal in Saudi Arabia, and you can start setting up a company in Saudi Arabia after obtaining the approval.
Important Points to Consider Before setting up a company in saudi arabia
Here are some key factors you should keep in mind before setting up a company in Saudi Arabia:
- Avoid skipping any regulations.
- Never disrespect any of their religious beliefs.
- Understand the local market, and never underestimate it.
- Try not to ignore Saudi's cultural sensitivity. Always respect it.
- Don't rush into any business deals; think before involving yourself in any deal. Or you can always contact experts to get guidance.
- Try not to ignore local customs and legal regulations. Be in a good rapport with local customs.
Saudi Business Visa Cost
The Saudi business visa cost is completely dependent on the type of business and the business activity you choose to be involved in.
Your office space also matters here as much as the size of your business. So, the visa cost can be determined only as per the requirements for setting up a company in Saudi Arabia.
Why choose us to set up a company in Saudi Arabia?
The simple answer is that the expertise we have will guide you in setting up your company. With Motaded by your side, you can sit back and relax while our experienced professionals handle every aspect of your company formation process in Saudi Arabia. Let us guide you smoothly through the journey to business success.
FAQs about setting up a company in Saudi Arabia
How to Speed Up the Process of Starting and Setting Up a Company in Saudi Arabia?
Work with expert consultants who will simplify the process and handle all documentation efficiently and swiftly. Saudi Arabia is enhancing its company setup systems and procedures to attract more foreign investment. As a result, company registration times have been cut by 50%, and commercial registrations are now issued much faster. Partnering with professionals who stay current on the latest licensing requirements is essential to ensure your business is up and running in the shortest time possible.
Contact our team today to learn more about setting up a company in Saudi Arabia.
What Incentives Does the Saudi Government Offer for Company Setup?
The Saudi government has introduced an incentive to assist with company formation and attract foreign investors. During the first year of establishing a business in Saudi Arabia, initial registration and setup fees are reduced by two-thirds. This significant cost reduction makes entering the Saudi market more attractive for new businesses.
What services does Motaded provide when setting up a company in Saudi Arabia?
Setting up a company in Saudi Arabia will complete the full company registration for your Saudi Arabian company to be operational in the quickest possible time. From the issuance of the Commercial Registration (CR) from the Ministry of Investment and the Ministry of Commerce, obtaining Chamber of Commerce membership, opening files, and completing the registration with the Ministry of Labor, the General Organization for Social Insurance, and the General Authority for Zakat and Tax. After your company is established, we’ll also assist in opening a corporate bank account in a Saudi bank and securing Iqamas (Saudi residency visas) for your general manager and employees, enabling you to begin business operations smoothly in Saudi Arabia.
Can Expats Own a Business in Saudi Arabia?
Non-Saudi nationals can own 100% of their company in Saudi Arabia. As part of the kingdom’s Vision 2030 initiative, establishing a legal entity or regional headquarters in Saudi Arabia comes with a range of attractive benefits and incentives.
Can Foreigners Own and Start a Business in Saudi Arabia?
Yes, foreigners can apply to set up a business in Saudi Arabia and have 100% ownership. The Ministry of Investment of Saudi Arabia (MISA) issues business licenses to foreign entities. However, for certain types of business activities, local Saudi participation through a partner may be required.
Which Business Activities Are Restricted for Foreigners?
When setting up a company in Saudi Arabia, there are some business activity restrictions that apply to foreigners. These restricted activities include consulting (with exceptions for specific management consulting services), as well as sectors like medical, military, recruitment, oil exploration, drilling and production, and real estate investment in Makkah and Madinah. The most common types of licenses we assist with in Saudi Arabia are within the services, trading, and industrial sectors.
What Documents Are Required to Set Up a Saudi Company?
The documents required to set up a Saudi company will vary depending on the company structure. The initial list of documents required (but not limited to) includes:
- A copy of the company’s current trade license or equivalent.
- Memorandum and Articles of Association, including any amendments or updates.
- A resolution and power of attorney outlining the intent to establish a Saudi entity.
- Passport copies of shareholders, directors, and authorized signatories.
How can I set up a company in Saudi Arabia?
The first steps towards setting up a company in Saudi Arabia involve an initial consultation to understand your needs. We then conduct a thorough review of your business profile and develop a tailored plan to apply for your foreign entity license through the Ministry of Investment of Saudi Arabia (MISA). After the company registration is finalized, you will receive your Commercial Registration (CR). Following this, we’ll manage all post-formation processes, including the steps to open a corporate bank account and apply for the general manager’s Iqama (Saudi residency visa).
Do I Need to Visit Saudi Arabia to Start and Complete the Company Setup?
Our business consultants can complete the Saudi company registration on your behalf. The appointed general manager is only required to visit Saudi Arabia after the company setup is complete and the commercial registration has been issued. During this visit, we will assist with obtaining the general manager’s Iqama (Saudi residency visa) and initiate the process of opening the company’s bank account.
What is the cost of setting up a company in Saudi Arabia?
The cost of establishing a Saudi entity depends on factors including the type of license, the shareholding structure, and the specific nature of the business activities involved.
Embarking on the journey of setting up a company in Saudi Arabia offers a variety of benefits and opportunities for foreign companies. From its streamlined online setup process to its secure social and commercial environment, Saudi Arabia presents an enticing landscape for entrepreneurs. Additionally, its strategic global position facilitates ease of transactions, making it an ideal choice for ambitious enterprises seeking growth and expansion.
To know more about what you need us for, setting up a company in Saudi Arabia
Contact Motaded today to book a comprehensive consultation with one of our experts.