How to Start a Business in Saudi Arabia from the UAE?

The Kingdom of Saudi Arabia (KSA) is growing at a rapid rate. This economic and legislative overhaul has positioned Saudi Arabia as a prime destination for businesses and individuals, including UAE-based businesses looking to expand their operations into new markets. 

Given the close proximity, cultural similarities, and shared economic interests between the UAE and KSA, expanding a UAE business to Saudi Arabia is a strategic move for many investors. 

However, setting up a business in a new jurisdiction is no small feat. It requires careful planning, an understanding of local regulations, and precise execution. 

Read the blog to know about the basics of expanding your UAE business into Saudi Arabia. 

Why UAE-based Businesses should Expand to Saudi Arabia? 

Expanding business into Saudi Arabia offers significant benefits for UAE companies. Here’s why this move could be a boon for them. 

1. A Booming Economy 

Saudi Arabia’s rapidly growing economy provides a stable environment for business expansion. The heavy investment in different sectors, and the funding initiatives along with business partnerships with other countries are improving growth prospects of the Kingdom. 

2. A Large Consumer Market 

Saudi Arabia is the largest market in the Middle East, boasting a significant and growing consumer base. This makes it an ideal location for businesses striving for rewarding ROIs. 

3. Strategic Location 

Saudi Arabia’s geographical position serves as a gateway to major global markets in Africa, Europe, and Asia. This strategic advantage offers businesses access to international trade routes and logistics networks. 

4. Special Economic Zones and Incentives 

Saudi Arabia’s Special Economic Zones offer tax incentives, streamlined business regulations, and modern infrastructure to support new business ventures. 

Legal Requirements for UAE Companies Expanding to Saudi Arabia

While expanding to Saudi Arabia, it’s a must for UAE-based nationals to adhere to its legal and regulatory requirements. 

That’s because the Kingdom might be easing its laws, but it’s quite strict when it comes to laws. These requirements vary based on your company’s structure and operations but typically include the following: 

1. Business Presence Options 

UAE companies can establish their presence in Saudi Arabia in one of three ways: 

• Branch Office: Operates under the parent company’s name and is fully owned by the UAE company. 

• Representative Office: Limited to market research and promotional activities but cannot engage in commercial activities. 

• Subsidiary Company: A separate legal entity owned wholly or partially by the UAE parent company. 

2. Minimum Requirements 

To register a business in Saudi Arabia, the UAE company must meet the following prerequisites: 

• Operating History: The UAE parent company must have been in operation for at least one year. 

• Audited Financial Statements: Submit audited financial statements for the previous financial year. 

3. Necessary Documents 

The list of necessary documents for business establishment in Saudi Arabia include: 

• Company Incorporation Documents (e.g., Trade License, Commercial Registry). 

• Memorandum of Association (MOA) outlining the company’s objectives and structure. 

• Power of Attorney (POA) authorizing a representative to act on behalf of the company. 

• Financial Audit Report for the last financial year. 

If the UAE company is registered in a free zone, additional documents like a Certificate of Incorporation or Certificate of Incumbency may be required. All documents must be certified by the UAE Ministry of Foreign Affairs (MOFA) and the Saudi Embassy in the UAE before submission. 

4. Investment Requirements 

Some licenses in Saudi Arabia require minimum capital investment. For instance: 

• Commercial License with 100% Foreign Ownership: Minimum SAR 30 million investment, with a commitment to invest SAR 200 million over five years. 

• Service Sector: Minimum SAR 30 million project value. 

• Transport Sector (100% Foreign Ownership): Minimum SAR 10 million investment. 

Steps to Register Your Business in Saudi Arabia from the UAE 

Setting up a business in Saudi Arabia means sailing through several government departments, which can take a little time. Listed below are the key steps involved in the process. 

Step 1: Register with the Ministry of Investment of Saudi Arabia (MISA) 

Start by obtaining approval from MISA, the primary authority responsible for foreign investment in Saudi Arabia. This step involves submitting your application along with the required documentation. 

Step 2: Obtain Commercial Registration from the Ministry of Commerce 

Once approved by MISA, register your company with the Ministry of Commerce to obtain your commercial registration certificate. 

Step 3: Register with Other Government Entities 

You’ll need to register your company with: 

• General Organization for Social Insurance (GOSI) 

• Ministry of Labor 

• Ministry of Interior 

These registrations are needed for hiring employees, paying social security, and obtaining work permits. 

Step 4: Secure Office Space and Local Address 

Saudi regulations require businesses to have a physical office space or local address. This also determines the number of visas one can sponsor. 

Step 5: Work Permits and Residency Visas 

Apply for work permits and residency visas for your employees, including your General Manager. Ensure that all employees are insured as per Saudi labor laws. 

Step 6: Open a Corporate Bank Account 

Open a business bank account in Saudi Arabia under your company’s name to facilitate financial transactions. 

KSA Corporate Laws and Legislation 

Saudi Arabia’s corporate laws and legislation form the foundation for businesses operating in the Kingdom, ensuring transparency, accountability, and compliance. 

These laws are designed to govern the formation, operation, and dissolution of companies. A UAE business or individual must understand and comply with the laws listed below for a successful business setup in Saudi Arabia.  

1. The 2022 Companies Law 

The new Companies Law, introduced in 2022, replaces the earlier 2015 Companies Law and governs the establishment and operation of various types of companies.  

2. Franchise Law 

The Franchise Law regulates franchise agreements in Saudi Arabia and facilitates smooth entry of international brands into the Saudi market. 

3. Anti-Money Laundering Law (AML) 

This law enforces strict measures to combat money laundering and financial crimes.  

4. Trade Names Law 

This law governs the use of trade names by businesses in Saudi Arabia, ensuring that business names comply with the naming laws and do not conflict with existing businesses.  

5. Law of Commercial Agencies 

This law regulates agreements between foreign businesses and their Saudi agents or distributors. It ensures fair trade practices, transparency, and the protection of parties in agency agreements. 

6. Bankruptcy Law 

The Bankruptcy Law gives a clear framework for resolving financial distress and insolvency and promotes transparency in bankruptcy proceedings. 

7. The Law of Commercial Register 

This law requires all companies operating in Saudi Arabia to register with the Commercial Register, which acts as an official record of businesses in the Kingdom. 

How Nimbus Consultancy Can Help? 

Expanding to Saudi Arabia can be rewarding, but it is not without challenges. Besides ensuring compliance on legal and regulatory aspects, UAE-based investors or businesses need to have properly attested documents in both jurisdictions.  

At Nimbus, we help UAE businesses make a compliant market entry in Saudi Arabia. Our team’s expertise in both UAE and KSA jurisdictions ensures hassle-free business setup services and processes. 

Ready to Make Your Mark in the Kingdom?

Expanding your UAE business to Saudi Arabia is a strategic decision that can reward your business with rich returns. However, a successful and compliant entry into the KSA market demands strategic planning, proper execution, and the right partners by your side to guide you through the process. 

With Nimbus Consultancy, you can navigate the complexities of business setup in Saudi Arabia with ease, mitigate risks, and look forward to a seamless expansion.