Foreign Company Incorporation in Saudi Arabia: Saudi Arabia, with its strategic location, robust economy, and ambitious Vision 2030 initiative with many mega projects like NEOM (US$ 500 billion), a virtual world’s future city having 14 business sectors, has become an increasingly attractive destination for foreign businesses seeking expansion opportunities in the Middle East. The Kingdom offers a business-friendly environment, and with the recent reforms, foreign company incorporation has become more accessible than ever.
In this comprehensive guide, we have discussed the process of establishing a foreign company in Saudi Arabia, exploring the key aspects and the unparalleled support provided by Fahad Al Tamimi legal experts and the Saudi government to ensure a seamless entry into this dynamic market.
Understanding the Business Landscape in Saudi Arabia
Saudi Arabia is welcoming foreign companies, expatriates, and tourists by reducing entry barriers and simplifying the process of business incorporation and relocation. Visa on arrival is now available for numerous European nationalities, showcasing the Kingdom’s commitment to facilitating international travel.
The living experience in the country has undergone a positive transformation, characterized by foreigner-friendly initiatives, creating an environment that competes favorably with global standards. It makes Saudi Arabia an increasingly attractive and accessible hub for individuals and businesses seeking new opportunities.
Saudi Arabia boasts a diverse and dynamic business landscape. From oil & gas, health & biotech, technology & IT, FMCG, finance, manufacturing, design & construction, education, research & innovation, food, energy, touris, sport, mobility, media to entertainment & culture sectors are thriving in the Kingdom of Saudi Arabia (KSA).
Before deciding to establish a foreign company, it is crucial to conduct thorough market research to identify opportunities and challenges within the chosen industry. Our legal financial experts help from the beginning for foreign company incorporation in Saudi Arabia and remain with to help further.
Benefits of Establishing a Foreign Company in Saudi Arabia
Establishing a foreign company in Saudi Arabia presents a myriad of benefits for international businesses seeking growth and expansion. With recent reforms and the visionary Vision 2030 initiative, the Kingdom has become a beacon for foreign investors. The key advantages of foreign company incorporation in Saudi Arabia are:
- Tax Breaks for 30-year: This is an offer to companies moving regional HQs to Riyadh – a game-changing economic initiative in the realm.
- 100% Foreign Ownership: In select sectors, foreign investors can now enjoy full ownership of their companies, a revolutionary change from the previous requirement of local partnerships.
- Streamlined Legal Procedures: The incorporation process has been optimized, with the Saudi government simplifying licensing, registration, and compliance procedures, ensuring a more efficient experience.
- SAGIA Support: The Saudi Arabian General Investment Authority (SAGIA) acts as a comprehensive facilitator, offering a one-stop-shop for foreign investors, assisting with licensing and regulatory requirements.
- Vision 2030 Incentives: Aligned with Vision 2030, the government provides various incentives, including tax breaks and customs duty exemptions, to encourage foreign businesses to contribute to the Kingdom’s economic diversification.
- Access to Specialized Economic Zones: Foreign companies can benefit from operating in specialized economic zones, each designed to cater to specific industries, providing tailored infrastructure and support.
- Financial Support Initiatives: The Saudi Industrial Development Fund (SIDF) and the Saudi Export-Import Bank (Saudi Exim) offer financial support to eligible foreign businesses, fostering growth and sustainability.
- Strategic Location: Saudi Arabia’s geographical location serves as a gateway to the Middle East and beyond, facilitating easy access to regional markets.
- Thriving Sectors: Booming industries such as technology, healthcare, and education present lucrative opportunities for foreign companies seeking to capitalize on the Kingdom’s economic growth.
- Lowest Crime Rate: Saudi Arabia has the lowest crime rate in the world.
- Cultural Awareness: Understanding and respecting local customs and business etiquette are crucial for building successful relationships in the Saudi market.
- Visionary Future: With ongoing economic reforms and a commitment to modernization, Saudi Arabia’s business landscape promises a bright future for foreign companies, positioning them for sustained success in the Middle East.
Vision 2030 and Economic Reforms
Vision 2030, spearheaded by Crown Prince Mohammed bin Salman, is a transformative initiative aimed at diversifying the Saudi economy and reducing its dependence on oil. The reforms include measures to enhance the ease of doing business, encourage foreign investment, and create a more vibrant entrepreneurial ecosystem.
Types of Business Entities in Saudi Arabia
Foreign investors can choose from several business structures when incorporating in Saudi Arabia, each with its own advantages and requirements. Options include:
- Limited Liability Companies (LLCs),
- Joint Stock Companies (JSC),
- Regional Headquarters (RHQ),
- Technical and Scientific Services Office (TSSO),and
- Branches of Foreign companies.
The choice depends on the nature of the business and the level of control and liability the investors are comfortable with.
100% Foreign Ownership in Saudi Company
One of the groundbreaking changes introduced in recent years is the ability for foreign investors to own 100% of their companies in certain sectors. This represents a significant shift from the previous requirement of having a local partner or sponsor. Sectors such as engineering, education, health, and information technology now allow full foreign ownership of companies in Saudi Arabia.
Legal Procedures for Foreign Company Incorporation in KSA
The process of incorporating a foreign company in Saudi Arabia involves several legal steps. These include obtaining necessary licenses, registering with the Saudi Arabian General Investment Authority (SAGIA), and adhering to local regulations. The government has streamlined these procedures to facilitate a more efficient and investor-friendly experience. There are mainly 3 steps in foreign company incorporation in Saudi Arabia:
A. Planning and Strategy
B. Company Incorporation
C. Bank Account Opening
A. Planning and Strategy for Foreign Company Incorporation in Saudi Arabia
The clients must determine some important items during the planning and strategy phase such as:
- Type of business entity which is to be incorporated, like LLC, JSC, RHQ, TSSO, and others.
- Name of business entity or brand name.
There are some documents required to be prepared in advance before the incorporation process. These documents are to notarize and legalize the parent company’s documents in the Kingdom of Saudi Arabia. Our legal experts will help in the preparation of these following documents:
- M & AA of Parent’s company
- Business Lincense for company
- Company’s Incorporation Certificate
- Company’s Board Resolution
- Power of Attorney
B. Foreign Company Incorporation Process in Saudi Arabia
Expanding business operations to Saudi Arabia requires a meticulous approach to navigate the regulatory landscape. The foreign company incorporation process in the Kingdom involves several key steps, ensuring compliance with local regulations and facilitating a smooth entry into the market.
1. Application for Investment License
The process begins with the submission of an application for an investment license to the Saudi Arabian General Investment Authority (SAGIA). SAGIA was replaced with a new Ministry of Investment of Saudi Arabia (MISA) in 2020 by a royal order. This step involves providing detailed information about the nature and scope of the business activities to be set up.
2. Article of Association
Companies need to draft and submit their Articles of Association, a legal document outlining the company’s structure, purpose, and operational guidelines. This document plays a crucial role in the registration process of a company in Saudi Arabia.
3. Company’s Name Registration
Selecting a suitable business name and registering it with the Unified Centre is an essential step. It should be approved before any other forms like incorporation form, article of association, etc. can be submitted. The name should comply with Saudi Arabian naming conventions and be distinct from existing businesses.
4. Registration with MERAS
Companies must register with the Ministry of Commerce and Investment’s online portal, MERAS. This platform facilitates the integration of information related to the commercial registration process.
5. Issuance of SAGIA/MISA Foreign Business License
Upon successful approval of the foreign business investment license application, SAGIA/MISA issues a Foreign Business License, allowing the company to operate within the Kingdom of Saudi Arabia. This foreign business investment license allows the company to sign contracts with other entities, issue invoices and hire required employees to operate the businesses smoothly.
6. Company’s Seal Creation
The company is required to create an official seal, which holds legal significance and is used for formal documentation and transactions. Such as:
- Agreements on contract
- Shareholder and Management resolutions
- In official letters and notices
- Government documents
7. Registration at the Chamber of Commerce
Registering with the local Chamber of Commerce is mandatory for foreign companies in Saudi Arabia. For this the applicant company will submit the Certificate of Membership obtained from the Chamber of Commerce and Industry (CCI). This must be completed within 30 days of registration of the CR. This step further establishes the business’s presence within the region.
C. Opening of Bank Account
To facilitate financial transactions, foreign companies in Saudi Arabia must open a local bank account. This is often a prerequisite for conducting business activities in Saudi Arabia.
Navigating these steps diligently ensures a successful foreign company incorporation in Saudi Arabia, allowing them to establish a robust and compliant presence in the dynamic markets of the Kingdom.
By understanding the legal procedures, leveraging incentives, and embracing the local culture, businesses can position themselves for success in one of the Middle East’s most dynamic markets. Contact our expert legal business consultant to make foreign company incorporation in Saudi Arabia more authentic and error free with competitive costing in the market.
FAQs on Foreign Company Incorporation in Saudi Arabia
Q. Can foreigners do business in Saudi Arabia?”
Ans. Yes, foreigners can do business in Saudi Arabia. Recent reforms allow foreign investors to establish companies, own 100% in select sectors, and benefit from a more streamlined process.
Q. How much does it cost to setup a company in Saudi Arabia?
Ans. The cost of setting up a company in Saudi Arabia varies based on the business structure, industry, and specific requirements. It typically ranges from a few thousand to several thousand dollars.
Q. Where can I register my company in Saudi Arabia?
Ans. You can register your company in Saudi Arabia through the Saudi Arabian General Investment Authority (SAGIA), which acts as the primary government agency overseeing foreign investment and business registration.
Q. How to register a foreign company in Saudi Arabia?
Ans. To register a foreign company in Saudi Arabia, initiate the process with the Saudi Arabian General Investment Authority (SAGIA) now called MISA. Complete necessary documentation, obtain required licenses, and adhere to legal procedures which are given in detail above.