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An eCommerce Business Setup Guide in Riyadh

Following worldwide lockdowns during the COVID-19 pandemic. It witnessed a shift in the retail business landscape along with consumer purchasing patterns and trends. The eCommerce industry has experienced a huge global growth in popularity and market share – making the eCommerce business setup in KSA an ideal venture. 

Because of eCommerce, the world realized that you can start a successful business from the comfort of your own home. This article discusses everything you need to consider before establishing an online business in Saudi Arabia.

With Saudi Arabia’s Vision 2030, the Kingdom is actively working to diversify its economy by strategically investing in eCommerce among other industries. 

The Kingdom’s internet penetration has soared in recent years; more than 67% of the population now has access to the internet. It leads to greater online shopping and services.

Steps to establish an eCommerce business setup in KSA:

Business Name 

Choosing a company name is one of the first steps in establishing a business in Saudi Arabia. Reservations can be made on the Ministry of Commerce and Industry’s website in Saudi Arabia.

This reservation is good for two months. The name must be chosen while keeping in mind the Saudi Arabian government’s rules for picking a company name.

Business Entity 

The type of company you establish will be determined by the management, capital, and liability structure you plan to implement. Some of the options include a sole proprietorship, a limited liability company (LLC), a joint stock company (JSC), a branch of a foreign LLC or JSC, and so on. This step is critical since the company type you select may have its own set of formalities.

Foreign Investment License

If you are unable to open a foreign branch in KSA and you want to obtain a license, an application must be submitted to the Saudi Arabian General Investment Authority (SAGIA). The license is usually delivered within 15-20 days and is valid for five years, according to SAGIA. Before the permanent license is obtained, a three-month Temporary Investment License is issued.

It should be noted that SAGIA is not the only license required to launch an e-commerce firm; the type and activity of your business will decide what other licenses you will require. You will need an eCommerce license in KSA to start operations. 

Before a company may begin operations, it must be registered with the Ministry of Commerce and Industry, the Chamber of Commerce and Industry, the Ministry of Labour, and the Tax Authorities.

Documentation

  • SAGIA investment license 
  • Identification proofs 
  • Summary of the Articles of Association
  • Confirmation of Application Form 
  • Completion of Receipt of company name reservation

Opening a Bank Account 

A bank account is required for every commercial operation; after being legally notarized, a transfer of capital and funds can take place. It is also critical to select the right bank. Typically, this is accomplished by matching your company’s needs to the various policies and benefits offered by numerous banks.

Establishment of Physical Office

Once all compliances have been met and documentation has been completed, you should begin looking for a location to begin operations and hire workers. It is necessary to establish a physical location of business in order to complete registration with the Commercial Registry.

Though there are some challenges to doing business in Saudi Arabia, such as adjusting to new business culture and high levels of censorship. Nevertheless, there are significant benefits to investing in the rapidly expanding e-commerce market. 

Registration in the Commercial Registry

This is the final stage in the registration process after completing all of the preceding documentation, setting up an office, and opening an account. 

The following documents would be required by the Ministry of Commerce and Industry:

  • The Articles of Association
  • A bank document that certifies capital payment
  • SAGIA investment license copy Office lease copy
  • Shareholders’ Board Resolution confirming the appointment of their board members

The market is expected to skyrocket in value over the next few years, providing a quick and significant return on investment. Today, start-ups and expanding businesses can feel confident about expanding into Saudi Arabia. Thus, your eCommerce business setup in KSA is bound to be profitable. 

Tax Registration

All Saudi firms, as well as any branch of a foreign company, are required to register with the Department of Zakat and Income Tax (DZIT). Zakat is a religious wealth tax imposed in the kingdom. The calculation of this tax can be difficult at times, however, it is generally charged at 2.5% of the company’s total capital resources. The procedure can take up to roughly three working days. With the steps listed above, you will be successful in opening a business in KSA. However, if you take onboard advisors, the process will be simpler. Consulting a professional business setup consultancy in KSA is an essential tool for smooth company formation. They assist you from square one to the establishment of your company. Make sure you do your research and hire one that fits your business needs best.

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