Expand Your Business in Saudi Arabia

Expand Your Business in Saudi Arabia

Want to Expand your Business in Saudi Arabia?. Saudi Arabia is a country known for its vast oil industry. It is one of the biggest free-market economies in the MENA region, with approximately 28% share of the total Middle East GDP. 

The strategic location of the country provides easy access to the export market. Domestic consumption is driven by the wealthy community in the kingdom, leading to demand setting up new businesses in various sectors. The business climate of Saudi Arabia is safe and secure. The availability of energy at low cost and driven by political stability encourages 100 % foreign ownership in the retail and wholesale sector. 

Significant reforms are attracting new investors and helping the existing ones to expand their business in the country. For a foreign investor business expansion in Saudi Arabia, it is essential to understand the correct type of corporate entity before making an investment decision. 

The New Companies Regulation Act came into effect in 2016 for Company Formation in KSA. 

There are five types of companies that one can start in KSA 

  • Limited Liability Company (LLC) 
  • Joint Stock Company (JSC)
  • Single Member Limited Liability Company (SMLLC)
  • Limited Partnership Company (LLP)
  • Joint Ventures

Apart from these, special business forms are available to overseas companies to do business in KSA by opening a branch or representative office.

How to Expand your Business in Saudi Arabia?

The reforms in policy and privatization efforts had made company formation quick and easy. One can expect to complete the entire registration process and start-up in six months.  

  • Pre-incorporation stage- The planning, strategizing, and the investor does due diligence. Deciding on the business type, paid-up capital required, and documentation for getting a business license is done at this phase. 
  • Deciding the name of company / Business
  • The type of business set up – LLC, LLP, SMLLC, JSC, Branch Offices, or other types
  • Completing the process required for starting the business operations like getting the license, Certificate of Incorporation, Board Resolutions, power of Attorneys, etc.
How do you get approval from authorities? 

Once the planning is complete and reviewed, the next step is to register the company. The following process can simultaneously save time. 

Application for Investment License Investors coming from non- GCC countries have to apply to SAGIA or the Saudi Arabian General Investment Authority. 

The SAGA application form should be duly filled up by clearly stating the nature of the business activity and the size of the investment. The significant financial information of the company must be stated clearly. The Sagia License in KSAis issued by the Sagia authorities with a pre-approval registration certificate. 

  • Articles of association 

It is required to be submitted to the Ministry of Commerce and Investment. After approval, the documents need to be notarized for commercial registration and Tax Number.

  • Application for company registration (CR) 

The name of the company is required to be reserved with the Unified Centre and approved first before submitting the deed of establishment, articles of association, and incorporation forms. After submitting all the documents – CR, municipality regulation, Tax, registration, Bank’s Share Capital approval, and deposit letter, SAGIA will issue a foreign business investment license, thus allowing the company to sign contracts, hire employees, and issue invoices. 

  • Bank Account Opening 

 A local bank account is needed to be opened within 90 days of issuance of a commercial certificate of registration. 

  • Business Visa and other compliances 

Post incorporation of the company, the other activities would include getting business employment visas for employees. 

  • Taxes 

Registered companies are taxed, including foreign investors, at 20%. Withholding taxes are levied on companies that make payments to the foreigners like rent and management fees. Different tax rates are applicable.

  •       MERAS registration 

This program by the KSA government is for helping set up foreign company registration, and Saudi Business Centre manages it. They speed up procedures for Business Setup in Saudi Arabia. The CR is issued in six weeks usually.

How Free Zones are helping the diversify and expand business in KSA

The country has opened Free zones to attract foreign investment. There are two types, Economic and Industrial. The industrial type only allows investments in manufacturing, whereas other activities like healthcare, agriculture, logistics, education, science, and research are allowed in the economic-free zone. 

Capital Required for businesses  

No minimum capital is mandatory for any business. Usually, in the case of SAGA, foreign LLCs are required to invest a minimum of SAR 500,000 in the capital. Depending on the business activities, the minimum paid-up capital requirements vary. For a 100% commercial foreign investment, a minimum of SAR 30 million is essential with the commitment to inject SAR 200 million investment in five years.

Business Set up assistance 

Though the laws of KSA are investor-friendly, many procedures are required to set up a company. Business consultants such as Business Link UAE who are well versed in the laws of the MENA region and can provide the best and Professional Assistance for business Setup in Dubai and Company Registration in Saudi Arabia