A Quick Guide to Setting Up a Business in Saudi Arabia (2024 Update)

Pro-business reforms, strong economic growth, and Vision 2030 initiatives – this combination along with 100% foreign ownership now allowed in many sectors, has made Saudi Arabia famous among investors.

Also, with major investments in industries beyond oil, it’s no surprise that entrepreneurs and corporations worldwide are eyeing the Kingdom for expansion.

If you too are considering a business setup in Saudi Arabia, this post discusses the benefits, legal structures, and a breakdown of the process, whether you’re a resident or an international investor.

Why Start a Business in Saudi Arabia?

Saudi Arabia offers several business benefits that make it a compelling business hub. Here are some good reasons to establish your business here.

1. Beneficial Tax Environment

Corporate Tax: Only 20% on foreign-owned businesses, significantly lower than many global markets.

Personal Income Tax: Saudi Arabia does not levy personal income tax on residents or employees.

Value Added Tax (VAT): Set at 15%, with exemptions for essential goods and services.

Special Economic Zones (SEZs): Offer tax incentives and customs duty exemptions for select industries.

2. 100% Foreign Ownership in Key Sectors

Under the Saudi Investment Law, foreign investors can now own 100% of businesses in most industries, including technology & IT, manufacturing, and tourism & hospitality.

3. Simplified Business Setup & Digital Processes

The Saudi government has significantly simplified the business registration process:

Online company registration.

Easier visa and residency options for business owners and employees.

4. Access to a High-Growth Market

Saudi Arabia is the largest economy in the Middle East, with a GDP of $1.1 trillion (2023) and a rapidly growing population of expats. With major infrastructure projects, a shift towards a knowledge-based economy, and significant digital transformation efforts, the market potential is enormous.

How to Set Up a Business in Saudi Arabia?

The process of establishing a business in Saudi Arabia differs slightly for residents and foreign investors. Below, we break down the steps for both.

For Saudi Residents

If you're a Saudi resident planning to start a business, follow these steps.

Choose a legal structure (LLC, Sole Proprietorship, Joint Stock Company, etc.).

Open a Local Business Bank Account

This is required for all business transactions in Saudi Arabia.

Secure a Wasel Address Registration

A physical office address is mandatory for business licensing.

Necessary for hiring employees and obtaining work permits.

Enroll in the General Organization for Social Insurance (GOSI)

Ensures compliance with Saudi labor laws.

Obtain Any Industry-Specific Licenses

Some sectors, such as healthcare, finance, or construction, require additional permits.

Business Setup Process in Saudi Arabia for Foreign Investors & Expats

Foreign investors can now establish businesses without a local Saudi partner in most industries. Here’s how they can do it.

Step 1: Apply for an Investment License from MISA

Previously known as SAGIA, MISA (Ministry of Investment of Saudi Arabia) issues foreign investment licenses.
You can apply online via the MISA portal or through a local business consultant.

Step 2: Choose a Legal Business Structure

The most common options for foreign investors are:
- Limited Liability Company (LLC) – Most flexible and popular for startups and SMEs.
- Branch of a Foreign Company – For multinational companies expanding into Saudi Arabia.
- Joint Stock Company (JSC) – Ideal for larger businesses planning to go public.

Step 3: Register Your Business with the Ministry of Commerce

Obtain your Commercial Registration (CR) Certificate.

Submit documents like Articles of Association (AoA), proof of identity, and lease agreements.

Step 4: Open a Saudi Business Bank Account

Required for managing company finances and employee salaries.

Step 5: Secure Your Business Location & Address

You must have a physical office or headquarters in Saudi Arabia.

If expanding regionally, you may need to establish a Regional Headquarters (RHQ).

Step 6: Obtain Work Visas & Register with Authorities

Apply for business visas and investor residencies through the Ministry of Interior.

Types of Business Structures in Saudi Arabia

Choosing the right legal structure is crucial for your business setup. Here are the most common options.

1. Limited Liability Company (LLC) – Most Popular

- Suitable for foreign and local entrepreneurs.

- Requires one shareholder (can be 100% foreign-owned).

- No minimum capital requirement (except for certain industries).

2. Joint Stock Company (JSC) – Best for Large Enterprises

- Suitable for large corporations and IPOs.

- Requires two or more shareholders.

- Ideal for public or private listings.

3. Branch of a Foreign Company

- Allows multinational companies to expand into Saudi Arabia.

- Must be 100% owned by the parent company.

4. Special Economic Zones (SEZs)

- Located in newly launched Special Economic Zones (SEZs).

- Offers tax incentives, customs exemptions, and streamlined processes.

Is Saudi Arabia the Right Place for Your Business?

Absolutely! With its business-friendly reforms, expanding economy, and global investment incentives, Saudi Arabia is a top choice for entrepreneurs and corporations.

By following the right process and understanding regulatory requirements, you can successfully establish and grow your business in one of the world's fastest-growing markets.

However, you need to make information-based decisions while going for company formation in the KSA like choosing the right business structure and partnering with a legal expert or a reliable advisory firm like Nimbus Consultancy.

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