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How to Start a Company in Saudi Arabia

 
The procedure on company formation in Saudi Arabia can last several weeks, being very similar to the procedure available in other countries. The country can become an ideal location for foreign businesses, as the local institutions, through the Saudi Arabian General Investment Authority, have created a legislative framework that accommodates the needs of foreign businessmen. Our team of consultants in company registration in Saudi Arabia can offer in-depth assistance on registering a company in Saudi Arabia with the local institutions. 

 
 Quick Facts  
 Types of companies

- sole trader,

- private company,

- limited liability company,

- public company,

- general and limited partnership 

Minimum share capital for LTD 

SAR 100,000 (approx. USD 26,000) 

Minimum number of shareholders for LTD 

At least one shareholder is required for setting up a business in Saudi Arabia 

 Minimum number of directors 1 director is required to start a business in Saudi Arabia 
Resident director required (YES/NO) 

No 

 Timeframe for registration (approx.)

It takes around 2 months to register a company in Saudi Arabia 

 Corporate tax rate

20% 

 VAT rates

Standard rate is 5%.

There are no reduced VAT rates. 

Shareholders annual meeting required (YES/NO) 

Yes, at least one annual meeting must be held no later than 4 months from the end of the financial year.

Redomiciliation permitted (YES/NO)  No 
 Electronic signature (YES/NO)

 Yes

Full foreign ownership allowed (YES/NO) 

Yes, full foreign ownership is allowed in wholesale and retail in Saudi Arabia.

 Access to double tax treaties (approx. number)

Yes, to approx. 55 double tax treaties 

Tax exemptions (YES/NO) 

Non-resident companies and investors are not liabile for Zakat.

 Other tax incentives (YES/NO)

Investors who open a company in the regions of Ha’il, Jazan, Najran, Al-Baha, Al-Jouf, and the Northern territory benefit from tax concessions.

Custom duty exemptions also apply to the import of raw materials and machinery that cannot be found in Saudi Arabia. 


Selecting a legal entity when setting up a business in Saudi Arabia


Before starting the company formation procedure in Saudi Arabia, a national or foreign investor must first select a business form under which the enterprise will operate.

According to the local legislation, the following legal entities can be employed to start a business in Saudi Arabia:
 
  1. the sole proprietorship which is advisable for single entrepreneurs completing simple activities (it is mostly employed by professionals in specific fields),
  2. the general partnership company which requires a minimum number of 2 members,
  3. the partnership limited by shares company which also requires at least 2 members and up to 50,
  4. the limited liability company which requires at least 2 shareholders,
  5. the private limited liability company which is quite popular among foreign investors in Saudi Arabia,
  6. the public limited liability company which can be used for the development of large operations.

Based on these legal forms, other types of companies can be created in Saudi Arabia. Among these, foreign companies can establish their presence in this country through branch offices and subsidiaries. Also, limited liability companies can be used for the creation of holding companies in Saudi Arabia.

If you are a foreign entrepreneur and are looking to register a company in Saudi Arabia, our specialists are at your service with a personalized consultation.
 

Register a company in Saudi Arabia


Setting up a business in Saudi Arabia implies completing several steps that must be respected by both local and foreign businesspersons. These are:
 
  1. choosing a trading name and reserving it (special requirements apply),
  2. preparing the incorporation documents in accordance with the type of legal form selected,
  3. opening the company bank account in order to deposit the share capital,
  4. filing the incorporation papers with the Companies Register in Saudi Arabia,
  5. obtaining the tax registration and VAT numbers,
  6. applying for the necessary business licenses and permits in accordance with the industry the company operates in.

Foreign investors can also register companies in Saudi Arabia’s free zones under very advantageous conditions.

Setting up a business in Saudi Arabia is not complicated or lengthy as long as the steps above are respected. With the help of our local agents who can partially handle the registration procedure, you can have an operating company in a short timeframe.
 

Compulsory registration requirements in Saudi Arabia 


After deciding on the business form that will represent the company operating in this country, the investors setting up a company in Saudi Arabia are required to register the company’s trading name with the Ministry of Commerce and Industry. The procedure can also be completed on the institution’s website and the respective reservation is available for a period of two months. The following step will be completed with the same institution, by submitting the company’s statutory documents

More specifically, the documents are to be filed with the Companies Department working under the Ministry of Commerce and Industry. Further on, the investors will need to personally collect the company’s documents and then sign them in front of a public notary in Saudi Arabia. Our team of agents in company formation in Saudi Arabia can offer legal assistance on the main provisions that are usually included in the company’s documents, depending on the legal entity that will be incorporated here. 

Another requirement is to publish the company’s trading name and a summary of the company’s statutory documents in the official gazette in Saudi Arabia, after the payment of a specific fee. 
 

The trading name reservation


After choosing the most appropriate business form, the trading name reservation is the first step to complete in order to register a company in Saudi Arabia. The selected name must be unique and in order to ensure this requirement is met, one can propose three names for reservation (the desired one must be the first name on the list). Also, for enhanced protection, after obtaining the reservation, the name can be registered as a trademark.
 

Documents to prepare in order to start a company in Saudi Arabia


The papers that need to be submitted when setting up a business in Saudi Arabia are represented by the Articles of Association which are the documents proving the decision to open the company. These must be filed alongside the details of the shareholders and directors, but also the proof of depositing the share capital. A bank statement indicating the amount of money required for the respective type of entity.
 

Share capital requirements for Saudi businesses


Compared to other jurisdictions, registering a company in Saudi Arabia has strict rules about the share capital requirements for each type of entity as it follows:
 
  • the minimum amount required for a limited liability company is 100,000 SAR,
  • in the case of a public company, at least 10 million SAR is required,
  • in the case of a private company, the minimum share capital is set at 2 million SAR,
  • for a general partnership company, at least 500,000 SAR is imposed on the 2 partners,
  • for a partnership limited by shares, a minimum capital of 2 million SAR is required.

The only business form that does not require a minimum share capital is the sole proprietorship.

We remind you that our company formation officers in Saudi Arabia are at your service with personalized services.
 

Opening a corporate bank account in Saudi Arabia 


The Saudi Arabia company formation stipulates that a newly formed legal entity has to set up a corporate bank account (under-formation bank account) for depositing the minimum share capital. Once the local authorities issue the certificate of registration, the bank account will be activated. 

The legal entity should also be registered with the Chamber of Commerce, Ministry of Finance and Ministry of Labor
 

Why start a business in Saudi Arabia


Doing business in Saudi Arabia is similar to operating in Western countries which is why it presents many benefits to foreign entrepreneurs. Moreover, from an economic:
 
  • Saudi Arabia was ranked 62nd in terms of ease of doing business in the World Bank’s 2020 report,
  • in 2020 it also entered the top 10 global business climate improvers,
  • the creation of a company can be completed in around 11 days,
  • the cost of registering a company is only 5.4% of the per capita income of an entrepreneur.

The company’s managers are required to obtain specific permits (work permit, residence permit) and persons interested in the above-mentioned aspects are invited to contact our team of specialists in company registration in Saudi Arabia for more details related to the registration of a business form.