How can foreigners start a business in Saudi Arabia?
Saudi Arabia is home to a growing community of expats who are attracted by the country's huge and open economy, favorable company formation procedures, and efficient tax regime. Find out more about the benefits of doing business in Saudi Arabia, whether a foreigner can open a business in the country, what list of documents is required to start the procedure, and other important details
Saudi Arabia is a country that has the largest economy among all Arab states and is among the top 20 strongest economies in the world. Thanks to this, it provides huge opportunities to every entrepreneur who decides to start a business here. Saudi Arabia is not only the largest oil exporter in the world, but also a major international business center. Thousands of businessmen from the USA, China, UAE, India and many other countries of the world open their own business here every year.
Saudi Arabia's development strategy until 2030 prioritizes the launch of small and medium-sized businesses, as well as attracting foreign investment. Therefore, now is the best time to start a business in Saudi Arabia. How to do it? Detailed instructions in our material.
Advantages of doing business in Saudi Arabia
From a simplified start-up process to an efficient tax system, Saudi Arabia offers many advantages for starting a business in the country:
- Tax benefits – foreign investors in Saudi Arabia pay minimal personal income tax, while corporate tax remains at 15%. Although Saudi Arabia has introduced VAT, most goods and services are still exempt and therefore zero-rated.
- Friendly environment – the country is open to international travelers, entrepreneurs and investments. The government is developing programs to attract expats, and a friendly approach from the local population encourages doing business in Saudi Arabia.
- Innovation – Saudi Arabia is aiming to become a global technology hub and has launched a series of billion dollar initiatives that will see the sector grow by 50% and create over 25,000 jobs.
- A safe place with a high quality of life - Saudi Arabia is considered one of the safest countries in the world, surpassing even Great Britain, Japan and New Zealand. The state was recognized as the safest of all G20 countries based on a set of certain indicators.
Can a foreigner open a business in Saudi Arabia?
Foreigners have the right to apply and start a business in Saudi Arabia. Involvement of a local partner is mandatory only in a limited number of directions. In general, an expat has the right to be the sole owner of a business.
How can a foreigner start a business in Saudi Arabia? Actions before starting your own business
Before starting a business in Saudi Arabia, foreigners must go through the following steps:
1. Register with the Ministry of Trade and Industry of the country.
2. Open a local bank account in Saudi Arabia.
3. Register Wasel - a mandatory requirement of the local government. It is important to note that an LLC requires a physical local office lease, so a virtual office address will not be sufficient.
4. Register with the visa issuing authority of the Ministry of Labor and Social Development (MLSD) to get the opportunity to work in the country
5. Go through the General Organization of Social Insurance (GOSI) Registration process – social insurance is mandatory for working in Saudi Arabia.
The list of documents for starting the procedure for registering an enterprise in Saudi Arabia
- Business license or commercial registration (CR) issued by MOCI. This certificate generalizes and allows the company to do business in Saudi Arabia and provides the same rights as citizens.
- Memorandum of Association (MoA) and Articles of Association (AoA) approved by MOCI and notarized.
- Certificate of position.
- A copy of the passport of the appointed general manager in Saudi Arabia.
How can a foreigner open a business in Saudi Arabia? Step-by-step instructions
To obtain a business license from the Saudi General Investment Authority (SAGIA) to start your own business, you must:
1. Choose the industry and type of business - this will determine where it is better to open your own business: on the mainland of Saudi Arabia or in the free zone. The industry also determines the type of license and legal structure required.
2. Choose the location of the enterprise - from 2023, Saudi Arabia will not issue work licenses to foreign investors or companies that do not have regional headquarters in the Kingdom. Therefore, if you plan to set up a branch company, you should rent a place or cooperate with a local service agent.
Entrepreneurs who create a new firm can choose a mainland territory or sign a package of licenses in a free zone.
3. Obtain a business license – All foreigners who plan to work in Saudi Arabia are required to obtain a business license issued by the Saudi General Investment Authority (SAGIA). On the basis of this document, an entrepreneur will be able to: invest in the country, buy or found a new company or open a foreign branch. Also at this stage it is worth applying for a certificate of commercial registration (CR) to the Ministry of Trade and Investment.
4. Prepare the necessary documentation - to confirm the creation of the company, it is necessary to appoint a general director and prepare the following package of documents:
- Confirmation of identity and address of directors and shareholders.
- Copies of passports of shareholders and directors.
- A copy of the company name declaration.
- Memorandum of Association (MOA).
- Charter (AOA).
- Reference letter from the bank.
Also, in order to live and work in Saudi Arabia without hindrance, it is necessary to obtain a business visa.
What obstacles await an entrepreneur when starting his own business in Saudi Arabia?
Starting a business in Saudi Arabia can be a daunting task due to the complex laws and numerous regulatory requirements. However, the country's government is actively working to simplify legislation for foreign investors and entrepreneurs.
The following factors can affect the ease of starting a business: the type of business, the industry in which it operates, and the necessary licenses and permits.
The main problems associated with opening a business in Saudi Arabia include:
- The foreigner's lack of understanding of the culture of Saudi Arabia, its laws and principles.
- Absence of proper business etiquette in the country.
- Need for changes in branding.
- Complex immigration laws.
- Change of technical standards.
- Lack of protection of intellectual property rights.
- Delay in payments by the government.
- A complex procedure for resolving business disputes.
Is it possible to start a business in Saudi Arabia without a sponsor?
After obtaining a SAGIA license, an expat can start a business in Saudi Arabia without a Saudi sponsor. However, you can get help from any firm that offers business organization services in Saudi Arabia.
For this, it is necessary to provide the following list of documents:
- Certificate of company registration in the country of origin.
- Certificate of tax registration.
- Private enterprise or FOP - a copy of the owner's passport.
- Companies must submit a charter.
In which city of Saudi Arabia is it better to start a business?
A report by Sortlist says that Riyadh is the best city in the Middle East and Central Africa for startups. The average broadband speed of 94.64 Mbps is higher than most cities in the region. There is also a high literacy rate here - 95%.
What are the best industries to start a small and medium business in Saudi Arabia?
The following areas are the most promising: real estate, education, agriculture, technology, health care, production of luxury goods, construction materials, etc.
So, the procedure for starting a business by a foreigner in Saudi Arabia has certain stages, and the expat also needs to prepare an appropriate package of documents.
Daria Rogova, Head of Insurance at Visit World
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Products from Visit World for a comfortable trip:
Checklist for obtaining a visa and necessary documents in Saudi Arabia;
Legal advice on business issues in Saudi Arabia;
Travel insurance for foreigners in Saudi Arabia;
Medical insurance around the world.
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