The UAE is rightly held up as one of the most vibrant and prestigious business locations in the Middle East. But it is far from the only one out here.
With a GDP totalling over USD 700bn, neighbouring Saudi Arabia is home to one of the largest economies in the world. While still largely reliant on oil, the country is taking steps to diversify, and open its economy to entrepreneurs across an array of industries.
This article explores the key considerations you’ll need to keep in mind if you want to set up in this incredible business environment, including:
- Benefits of getting a business licence in Saudi Arabia
- Documents required to start a business in Saudi Arabia
- Timeline to start a business in Saudi Arabia
- Types of business licences in Saudi Arabia
- Why start your company with BIZ?
Benefits of getting a business licence in Saudi Arabia
Business setup in Saudi Arabia brings with it many benefits, not least a fast and affordable company incorporation process. On top of this, businesses out here can take advantage of 100% foreign company ownership and favourable tax laws.
Investors here have minimal income and sales tax liabilities, and support is plentiful for businesses that can help diversify the Kingdom’s economy.
Then there is the country’s world-class infrastructure and high-tech environment, underpinned by a robust 5G network to help businesses stay connected.
Saudi Arabia ranks highly in the World Bank Doing Business Index, too, coming in at 63 out of 190 countries. This puts it above the likes of Qatar, Luxembourg, and Jordan. The Saudi economy has also experienced an annual average growth rate of 4% in recent years and with the country’s rulers actively encouraging foreign investment, we can expect his figure to increase in the years ahead.
Documents required to start a business in Saudi Arabia
The documents required to start a business in Saudi Arabia vary depending on the type of operation you wish to establish and the nature of your activities. However, all foreign entrepreneurs require an investment licence before they can incorporate a new business. This can be obtained from the Saudi Arabia General Investment Authority (SAGIA).
You will also usually need to a submit a complete company licence application form and some or all of the following documents:
- Proof of ID and address for directors and shareholders
- Passport copies for directors and shareholders
- Copy of trade name confirmation
- Memorandum of Association (MOA)
- Articles of Association (AOA)
- Bank reference letter
- Lease contract for the company premises
- Certificate of clearance and good conduct
- Power of attorney from all shareholders
All documents must be certified by the Saudi Embassy and the Ministry of Foreign Affairs.
Timeline to start a business in Saudi Arabia
When you work with the company formation experts at Business Incorporation Zone (BIZ), the timeline to start a business in Saudi Arabia is as follows:
Select a business structure
The first decision to make concerning business setup in Saudi Arabia is whether to operate in the mainland or in a free zone. You’ll need to make this decision upfront as it will impact the type of licence you require.
Register your company name
The next step is to register your company name. Your name must not be similar to any existing business or entity. Nor should it contain any words that are potentially offensive or blasphemous. BIZ will check that your chosen name is available before registering it for you.
Apply for an investment licence
All foreigners wishing to start a business in Saudi Arabia are required to apply to SAGIA for an investment licence. This allows you to invest in the country, start a new business or open a foreign branch of an existing business.
At this stage, you will also need to apply to the Ministry of Commerce and Investment for a commercial registration certificate.
Lease a business premises
As of next year, foreign owned companies are not able to apply for a Saudi trade licence unless they have a regional headquarters in the country. Therefore, if you are starting a new company here, you will first need to secure a workspace. This could be in the mainland or in a free zone.
Application and supporting documents
Now you are ready to apply for your Saudi Arabi trade licence. As part of this process, you will need to get the documents listed above notarised by the Saudi Embassy and the Ministry of Foreign Affairs.
In many cases, you will also have to register your business with the Ministry of Labor and Social Development (MLSD), General Organization of Social Insurance (GOSI), General Authority of Zakat and Tax (GAZT), and others.
You dedicated account contact at BIZ will assist through this process, ensuring all documents are in order and correctly certified before submission. We will then liaise with all authorities and let you know as soon are you are permitted to trade.
In most cases, the business setup in Saudi Arabia process takes around three to four months.
Types of business licences in Saudi Arabia
There are two common types of businesses established by foreigners in Saudi Arabia. This first is an LLC. This is similar to an LLC anywhere else in the world in that it can be formed by one or multiple shareholders – up to 50 in total.
Shareholders can be individuals, corporate entities or a combination of the two. LLCs are permitted to carry out a wide range of business activities, but all must be clearly stipulated in the company’s commercial registration.
The second most common company type is the branch office. Branch offices offer foreign businesses a relatively quick and easy way to establish a presence in the Saudi market.
Branch offices are always owned 100% by the foreign parent company and they are only permitted to carry out activities that fall within the scope of the parent’s licence.
Another, less common, option is the Saudi Joint Stock company (JSC). This is the equivalent of a publicly listed company and is therefore subject to much more stringent compliance requirements. Any LLC that exceeds the 50-shareholder limit must be converted to a JSC within a year.
Why start your company with BIZ?
Business Incorporation Zone is one of the region’s leading experts in company formation and relocation. Our global knowledge and local expertise make setting up a business in Saudi Arabia fast, simple and even enjoyable.
First and foremost, we understand that every business is different. That’s why every member of our team will first take the time to understand your requirements before tailoring our services to suit.
We remain on hand way beyond launch, too, as your trusted partner to help your business grow and thrive. So, if you’re ready to get started in Saudi Arabia, get in touch with BIZ today.