If you're a foreign investor exploring the cost of opening a company in Saudi Arabia, this guide breaks down everything you need to know—from licenses and capital to taxes and rent. Get clear insights to help you budget wisely and launch confidently under Vision 2030.
Cost of Opening a Company in Saudi Arabia
Setting up a company in Saudi Arabia as a foreign investor typically costs between 50,000–150,000 SAR ($13,000–$40,000 USD) in the first year, depending on business size, activity, and location.
The process usually takes 2–6 weeks, and obtaining a MISA license— foreign investment license— is mandatory for any company with foreign ownership.
To properly prepare your budget, you need to understand all the factors that affect your costs and expenses.
Factors Affecting the Cost of Company Formation
The total cost of starting a company in Saudi Arabia can vary significantly depending on several key factors.
Some of these are structural—like your choice of legal entity or location, while others are shaped by recent reforms under Vision 2030.
Key Factors That Influence Company Formation Costs in Saudi Arabia:
1. Type of Business Structure: Whether you choose an LLC, Joint Stock Company (JSC), or a foreign branch impacts registration fees, capital requirements, and ongoing compliance obligations.
2. Industry and Regulatory Requirements: Some sectors—like finance, education, or healthcare—require higher declared capital, extra licenses, or stricter regulatory approvals, all of which raise startup costs.
3. Ownership Structure: Foreign ownership requires a MISA license, which adds a regulatory layer and costs. However, under Vision 2030, the removal of the local sponsor requirement has reduced legal and operational barriers for foreign investors.
4. Location of the company: Free Zone vs. Mainland: Setting up in free zones like NEOM or KAEC can offer lower long-term costs thanks to tax exemptions, simplified licensing, and relaxed Saudization quotas.
Mainland businesses have full market access but face higher compliance costs, including full Saudization, municipal fees, and taxes.
5. Office Space Requirements: Most businesses must lease a physical office with costs varying by city and whether the office is in a commercial district or free zone. Major cities like Riyadh tend to be more expensive.
6. Saudization and Workforce Costs: Hiring Saudi nationals is mandatory in many sectors. Non-compliance leads to penalties, but incentives and exemptions exist in specific industries and zones.
Read also: Register Your Company in Saudi Arabia.
Main Costs & Fees Required for Opening a Company in Saudi Arabia
When opening a company in Saudi Arabia, it’s essential to understand all core expenses involved. Here's a breakdown of the main costs and fees most foreign investors should expect:
1. Company Registration & Commercial License Fees
Registering your company with the Ministry of Commerce (MoC) usually costs between 1,500–3,000 SAR (approx. $400–$800 USD) depending on the type of legal entity and whether you use professional service providers.
2. Licensing Costs
To set up a company in Saudi Arabia as a foreigner, several licenses are mandatory to get the allowance to open and run your company legally. These include 4 essential licenses -additional licenses may be required depending on your business activity.
- Cost of MISA License (Foreign Investment License):
According to the Ministry of Investment (MISA), the registration fee for a foreign investment license MISA in KSA is 12,000 SAR ($3,200 USD), with an annual renewal fee of SAR 62,000.
This license is issued by the Ministry of Investment and allows non-Saudi individuals or entities to legally operate or own a business in the Kingdom.
- Cost of Commercial Registration (CR):
Commercial Registration (CR) in Saudi Arabia is Mandatory for all companies and it usually costs between 1,500 and 3,000 SAR ($400–$800 USD)
It is issued by the Ministry of Commerce and is essential for legally establishing a business.
The CR includes details such as the company name, activity, and legal structure, and it must be renewed annually.
- Cost of Municipality License:
A municipality license in Saudi Arabia costs between 500–2,000 SAR ($130–$530 USD) per year, depending on business activity and location.
This license is issued by the local municipality and is necessary for operating from a physical address. A valid lease contract is typically required for approval.
- Cost of Chamber of Commerce Membership:
Chamber of Commerce membership fees in Saudi Arabia range from 800–3,000 SAR ($210–$800 USD) annually.
This membership is mandatory for all registered businesses and is required for accessing official services, verifying documents, and maintaining compliance with commercial regulations.
3. Office Space Rental
In major cities like Riyadh or Jeddah, rent starts at 20,000 SAR (~$5,300 USD), though virtual office options may be available in some free zones or incubators.
4. Legal Notarization & Attestation
Costs for notarizing incorporation documents, drafting legal contracts, and translation services typically range between 5,000–10,000 SAR ($1,300–$2,600 USD).
5. Capital Requirements
General businesses often declare between 100,000–500,000 SAR ($26,000–$133,000 USD) during setup.
However, regulated industries such as banking, insurance, and investment may require a paid-in capital starting from 1 million SAR ($266,000 USD) or more, depending on the regulatory body.
6. Tax Obligations
According to the Zakat, Tax and Customs Authority (ZATCA), the following tax obligations apply:
- Corporate Income Tax: 20% on non-GCC ownership profits
- Zakat Tax: 2.5% applied instead of corporate tax if the company is fully GCC- or Saudi-owned
- 15% VAT on most goods and services (mandatory once annual revenue exceeds 375,000 SAR ($100,000 USD)
- 5%–20% Withholding Tax on cross-border payments like royalties or service contracts
7. Employee Salaries
With the Saudi 2030 vision, hiring staff comes with mandatory requirements. Saudi labor law sets minimum wages for Saudi employees (currently around 4,000 SAR or ~$1,070 USD/month to count toward Saudization quotas).
Additionally, expat salaries may vary widely by role, and employers must also account for social insurance (GOSI) contributions—typically 22% of the employee’s salary split between employer and employee.
8. Additional Costs to Consider
- Legal and consulting fees: For company setup, regulatory guidance, and contract drafting.
- Opening a bank account: Some banks may charge setup or maintenance fees for corporate accounts.
- Employee visas and insurance: Covers visa processing and mandatory health insurance for staff.
- VAT registration and accounting: Required once revenue exceeds the threshold; may need professional accounting support.
These expenses usually range between 10,000–50,000 SAR ($2,600–$13,300 USD) depending on business size and activity.
Read also: Taxes in Saudi Arabia.
Cost of Different Business Structures in Saudi Arabia
The legal structure you choose significantly impacts both your setup costs and compliance obligations.
Below is a breakdown of the costs associated with the three main types of business entities in Saudi Arabia.
Cost of Limited Liability Company (LLC) in Saudi Arabia
A Limited Liability Company (LLC) is the most common and flexible business structure for foreign investors in Saudi Arabia. It offers limited liability protection to shareholders and is ideal for small to medium-sized enterprises.
One of its key benefits is that, in most cases, there’s no need to deposit the declared capital during setup. The cost to register an LLC typically ranges from 1,500 to 3,000 SAR (approximately $400–$800 USD).
An LLC can have between 1 and 50 shareholders but cannot issue shares to the public. It’s a suitable option for businesses seeking simplicity, affordability, and full operational control.
Cost of Joint Stock Company (JSC) in Saudi Arabia
A Joint Stock Company (JSC) is designed for larger enterprises, especially those planning to raise capital or go public in the future. This structure allows companies to issue shares and attract investors, making it ideal for long-term expansion.
The setup cost for a JSC ranges from 5,000 to 10,000 SAR ($1,300–$2,600 USD), and a minimum capital of 500,000 SAR ($133,000 USD) is required.
A JSC must have at least five shareholders and adhere to more complex reporting and governance standards. This type of company is best suited for ambitious ventures aiming to scale in the Saudi market.
Cost of Branch of a Foreign Company in Saudi Arabia
Establishing a branch of a foreign company in Saudi Arabia allows international businesses to operate under their existing brand without creating a separate legal entity.
This option is ideal for testing the Saudi market or expanding regional operations. A foreign branch requires a MISA (Ministry of Investment) license, which costs around 12,000 SAR ( $3,200 USD) per year.
While there is no capital requirement, the parent company must demonstrate financial strength and credibility. However, not all business activities are permitted for foreign branches, and operations must align with the scope approved by MISA.
Best Sectors for Cost-Effective Business Setup in Saudi Arabia
While the overall setup cost varies, some sectors in Saudi Arabia are more affordable for new businesses.
Low-cost sectors include IT services, digital marketing, e-commerce, consulting, and general trading—especially when operated through virtual offices or free zones. These fields often require lower capital and fewer regulatory approvals.
On the other hand, high-cost sectors include healthcare, education, construction, and finance due to strict licensing, higher capital requirements, and compliance regulations. Choosing a cost-effective sector aligned with Vision 2030 priorities can help minimize initial investment and maximize growth potential.
Tips for Budgeting When Opening a Company in Saudi Arabia
- Estimate your setup costs: Include company registration, MISA and commercial licenses, legal documentation, translations, and office lease.
- Plan for ongoing expenses: Such as annual license renewals, business premises, employee salaries, health insurance, and accounting services.
- Choose the right legal structure: LLCs are usually the most cost-effective option for foreign investors.
- Consider virtual office options: If allowed for your business activity, this can significantly reduce rental costs.
- Set a realistic initial budget: Most SMEs should plan for at least 150,000–300,000 SAR ($40,000–$80,000 USD) for the first year.
- Work with a reliable local consultancy: Expert support by business services providers can help you avoid delays and hidden costs. Motaded’s team is among the top specialists guiding foreign investors in Saudi Arabia.
Get Expert Help with Motaded — Saudi Arabia’s Trusted Business Services Provider
At Motaded, we specialize in helping international entrepreneurs navigate the full cost structure of doing business in Saudi Arabia.
From choosing the right legal structure to estimating licensing, Saudization, and operational expenses—we provide tailored guidance to help you avoid unexpected costs.
Get a personalized cost assessment and start your company in Saudi Arabia with clarity, confidence, and no financial surprises.
Contact us today and prepare a smart budget with trusted experts.
FAQ About Cost of Opening a Company in Saudi Arabia
What is the average budget needed to start a business in Saudi Arabia?
Most foreign investors should plan for a starting budget between 50,000 and 150,000 SAR (around $13,000–$40,000 USD) in the first year.
What’s the difference between Zakat and corporate income tax in Saudi Arabia?
In Saudi Arabia, Zakat is a religious wealth tax applied at 2.5% on the net worth of fully Saudi- or GCC-owned companies. In contrast, corporate income tax is charged at 20% on the profits of foreign-owned companies (non-GCC ownership). While Zakat is based on Islamic principles, income tax is a fiscal obligation for foreign investors.
Which taxes apply to Saudi-owned vs. foreign-owned companies?
Saudi- and GCC-owned companies in Saudi Arabia typically pay 2.5% Zakat, while foreign-owned businesses pay 20% corporate income tax on profits.
Additionally, all businesses may be subject to 15% VAT and withholding tax (5%–20%) on foreign payments, depending on their transactions and structure.
What is the most cost-effective company type for international investors?
An LLC (Limited Liability Company) is often the most efficient choice, offering low setup costs, flexible capital, and limited liability.
How does Saudi Vision 2030 affect the cost of opening a company in Saudi Arabia?
Saudi Vision 2030 has significantly impacted startup costs by removing barriers like the local sponsor requirement and streamlining licensing for foreign investors.
While compliance standards have increased, incentives in key sectors, simplified procedures, and free zone developments (like NEOM) have made it more cost-effective in the long term.
Overall, Vision 2030 aims to reduce red tape and promote investment, helping foreign entrepreneurs manage costs more efficiently.