FAQs About Business Setup in KSA
Business Setup in Saudi Arabia FAQs
There are 4 types of setups Business Link assists in for its clients:
- Subsidiary Company: Subsidiaries setup are a type of company that are at least majority-owned by another company. This company that acts as the majority owner is generally known as the parent company or holding company. To reiterate, the parent/holding company is required to own more than 50% of the subsidiary company, if it owns the complete 100%, the subsidiary will go on to be known as a ‘wholly-owned subsidiary’.
- Branch Office: A branch office or branch company is another establishment that serves as an extension of the existing company. Though the branch is physically separated from the main office, it will be 100% owned by the foreign investor.
- Dual Ownership: In this type, you have the opportunity to buy a company in the UAE and launch a branch in KSA.
- GCC Company: A GCC Company is a special investment opportunity offered only to nationals of other GCC countries. This company type presents GCC nationals with the same benefits that are offered to nationals of KSA – meaning you can skip out on having to wait for approvals and licenses, all in all, cutting the processing time in half.
When you plan on establishing a company in Saudi Arabia, you need to be aware of the taxes that are levied upon companies.
- As of July 2020, the country has started to charge companies 15% VAT.
- 20% tax is charged on the net profits earned by non-Saudi entities.
- Any company in Saudi Arabia is required to pay the corporate income tax and Zakat (2.5% net profit). This is valid for companies with KSA/GCC shareholders as well as those with non-KSA/GCC shareholders.
Saudization, also known as the Nitaqat program, is a local nationalization program initiated by the Saudi Government to increase Saudi’s presence in the workforce. This program requires companies in Saudi Arabia to hire a certain number of Saudi nationals, according to the size of the business.
Usually, it takes around 10-15 working days for all formalities to be complete, this is counted from when our KSA team received all necessary documents.
As a foreign investor, you are not permitted to set up a new business within Saudi Arabia. You can however expand your existing business that is based outside of KSA and set up a branch for the same in the country. An important pre-requisite for the same is that it must be functioning business for over a year.
Setting up a new business in Saudi Arabia is permitted only for Saudi locals as well as nationals of other GCC countries.
- Parent company’s business license
- Memorandum of Association
- Audit report for the past year
- Passport copies of the shareholders
- National IDs of the shareholders
- Passport copy of the appointed manager
- Power of Attorney (Permitting Business Link KSA to carry out your tasks)
- Company Resolution
Note: All your documents must be translated to Arabic and should be attested by the Ministry of Foreign Affairs in Saudi Arabia and the Saudi Embassy.
As a business owner/branch owner in Saudi Arabia, by law, you are required to follow certain methods when paying your staff.
- If your company has less than 5 employees, you may pay them in cash or through a bank cheque.
- However, if your company has over 5 employees, you may pay them via bank transfer from the company bank account to reflect in the WPS (Workers Protection System) portal.
Yes, an office address is mandatory to begin business operations in the country.
Business Link KSA offers various options in this regard to assist clients in finding the right option for them. Physical office, virtual office, or a business center – we offer guidance based on your requirements.
Apart from setting up branches for foreign investors, and GCC companies for GCC nationals, Business Link KSA offers a vast range of services related to business setup. These are:
- Obtaining additional approvals for certain business activities.
- Assistance with applying for and renewal of manager residence visas, employment visas, and investor visas.
- Locating an appropriate office as per your requirement.
- Assistance with bank account opening (Riyadh Bank).
- Bookkeeping and Tax filing.
- Company VAT registration.
- Business license renewal.
- Document attestation, notarization, and translation.
No, GCC Nationals are exempt from obtaining a SAGIA/MISA license – this means their application can be processed much quicker. However, they are required to register with the Ministry of Commerce and Investment (MOCI).