Business startup in Saudi Arabia

The Kingdom of Saudi Arabia (KSA) is among the largest economies in the middle-east. Over the years, the kingdom has grown into an ideal hub for emerging business ventures. It continues to attract investors and business owners from across the globe. The governing body of Saudi Arabia is working on several initiatives that’ll help in making the country more business-friendly. It also encourages small and medium-sized businesses to flourish in its business ecosystem.

Business setup in Saudi Arabia is now much more straightforward due to the massive reforms in government policies. Also, its strategic vision towards economic growth and vibrant society makes it one of the prominent investment destinations. The strategic location is an essential factor as it acts as a connecting link between global trade routes. It vastly improves the expansion of commercial activities throughout the country. With great emphasis on the growth of the private sector, it is beneficial to start a business in Saudi Arabia. The following sections highlight the essential aspects of business setup in Saudi Arabia.

Business Opportunities in Saudi Arabia

With an expanding market, the Kingdom of Saudi Arabia offers a wide range of business opportunities across various sectors. The business sectors that hold immense opportunities for emerging ventures are listed below:

• Industrial Products and Services
• Manufacturing
• Tourism and Hospitality
• Banking and Security
• Real Estate
• Small and Medium Industries
• Health Care
• Technology
• Entertainment and Media

Types of Company Formation in Saudi Arabia

The Kingdom of Saudi Arabia offers investors and business owners to establish a company in the jurisdiction, which can be one of the following legal entities:

Single Member Limited Liability Company (SMLLC)

Single Member Limited Liability Company (SMLLC) is a limited liability company that can have a sole owner, and the owners of the establishment are termed as members. In this type of business entity, the business owner owns all the shares of the company. There are many advantages of owning a single-member LLC, but it is essential to understand that a person is not allowed to establish and own more than one SMLLC.

Joint Stock Company (JSC)

A Joint Stock Company (JSC) consists of capital that is divided into shares of equal value. The shares are owned by shareholders who are allowed to buy, transfer and sell their respective shares without affecting the existence of the company. Establishing a Joint Stock Company in Saudi Arabia involves submitting the company’s name, purpose and a Memorandum of Association specifying the number of members.          

Limited Liability Company (LLC)

Limited Liability Company (LLC) is the most commonly used business entity in Saudi Arabia, which allows limited liability for owners under the company’s debt. An LLC is not allowed to have more than 50 shareholders. Each shareholder should sign the MOA and the company can appoint one or more auditors according to the business requirements. For LLC company formation in Saudi Arabia, the legal entity should provide details about shareholders, management, capital, auditors and other business-related information to the regulating authorities.

Foreign Company Branch

A Foreign Company Branch is a company that operates in the jurisdiction through a branch, agency, office or other business forms. The branch of a foreign company can represent and conduct business activities in Saudi Arabia.  However, it should comply with the local law and regulations which involves using the Arabic language for company paper, publications and documents.

The Saudi authorities facilitate investors and business owners to establish one of the above mentioned legal entities to carry out various business activities in the market. Each of these business types has its advantages, and business owners can choose one according to the company requirements.

How to Start a Company in Saudi Arabia?

Saudi Arabia has been continually expanding its private sector activities that have resulted in making the business setup process more convenient. The following is the procedure for company formation in Saudi Arabia:

• The first step for business setup in Saudi Arabia is to select the type of legal entity suitable for business activities. Business owners can choose one of the above-mentioned legal forms for their company.
• The next move would be to register a trading name for the business. Selecting a unique company name and location is a vital part of business registration.   
• After the registration of the company name, the next step would involve preparing the documentation required for the company registration process. It includes documents such as a copy of national identity, valid residency, company registration application and investment plan.
• Submit the application to the Saudi Arabia General Investment Authority (SAGIA) for issuance of investment license. SAGIA is the governing authority that regulates all investment activities in Saudi Arabia.
• Open a bank account in a local bank to deposit the initial capital investment of the company.
• Register the company with Commercial Registry at Ministry of Commerce and Industry and The Chamber of Commerce
• Obtain commencement certification and registering with the Department of Zakat and Income Tax (DZIT).

Free Zones in Saudi Arabia

The economic cities in the Kingdom of Saudi Arabia are aiming at diversifying the economy of the country. These economic cities offer benefits for emerging ventures that include low tax rates, tax exemption on custom duties, exposure to the international market and global connectivity.

Jazan Economic City

The Jazan Economic City is a free trade zone with a focus on manufacturing and energy industries. It focuses on critical areas such as heavy industries, human capital and lifestyle. There are a variety of business opportunities in the Jazan Economic City that includes trading, industrial services, technology, education and employment opportunities. It can accommodate around 250,000 people with the industrial park occupying two-thirds of the space.

Prince Abdulaziz Bin Mousaed Economic City

The Prince Abdulaziz Bin Mousaed Economic City is located in the northern part of Saudi Arabia. It is a proposed economic city that is planned to focus on five significant sections to meet the requirements of the investors from different economic industries and sectors. The essential parts of this economic city include agriculture zone, educational services zone, residential district, resort zone, transportation and logistics.  

King Abdullah Economic City

King Abdullah Economic City is situated along the Red Sea coast at a distance of 100 KM from Jeddah. The economic city has functional connectivity with surrounding cities like Mecca and Medina. It is a part of Saudi Arabia’s plan to make the kingdom one of the best investment destinations. The primary focus of the city is to increase direct foreign and domestic investment to diversify the kingdom’s economy. Some of the critical developments in this economic city include the Science and Research complex, Health Care City, Ethraa and KAEC Media city. 

Tax Scenario in Saudi Arabia

The Department of Zakat and Income tax is responsible for the implementation and regulation of tax laws in Saudi Arabia. There are two components of taxation – Income tax and Zakat. Income tax is applicable for foreign nationals whereas Zakat is a religious levy applicable for KSA (or) GCC nationals. After company registration in Saudi Arabia, the company has to register with DZIT to conduct business in Saudi Arabia legally. The following list consists of personals who qualify to pay income tax:

• A non-resident person who does business activities in KSA
• Non-resident investors
• Resident companies with non-KSA shareholding
• Individuals who conduct business activities in the oil and petroleum sector.

Why Invest in Saudi Arabia?

Saudi Arabia is perhaps a suitable destination for investors owing to the flexible corporate laws and lower tax rates. The following are some of the reasons to invest in Saudi Arabia:

• An ideal destination for trading and investment
• Strategic Location
• Growing Economy
• Politically stable
• Business-friendly environment

Benefits of Setting up a Company in Saudi Arabia

• Saudi Arabia provides a business-friendly environment which is suitable for small businesses and corporations alike.
• The numerous reforms done by the country in the last few years has made starting a business much more convenient.
• The governing body provides tax support in the form of tax exemptions and eliminating custom duties on selected goods and materials.
• Businesses have access to a growing marketplace of potential clients.
• Office spaces are available with world-class amenities.
• Also, financial incentives are available for projects and ventures that support the country’s economic growth.

Our Business Setup services in Saudi Arabia

While setting up a business in Saudi Arabia is a straightforward procedure, it is reasonable to consider business setup services to make your business journey more convenient. Here at Business Setup Worldwide, we provide a wide range of services that helps entrepreneurs, startups and investors in setting up their business efficiently in less time. Our expert advisors assist with essential aspects such as tax consultation, documentation, legal and accounting formalities. Contact us today as we would be happy to help you kickstart your business journey!