Saudi Arabia Company Formation - Company Registration - IMC
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Saudi Arabia Company Formation

saudi arabia company formation company registration

Saudi  Arabia,  officially  known  as  the  Kingdom  of  Saudi Arabia,  is  the  largest  Arab  state  in Western  Asia.  It  is bordered by Jordan and Iraq on the north, Kuwait, Qatar, Bahrain and the United Arab Emirates on the east, Oman and   Yemen   on   the   south.  With a total area of 2,149,690 sq. km accounting for 80 per cent of the Arabian Peninsula, the Kingdom of Saudi Arabia (KSA) is the largest Arab state in Western Asia, with a, population of 30.6 million in 2014. The country has a very youthful demographic profile with a median age of 26.4 years.
Oil revenues account for about 90 percent of export earnings and about 80 percent of government revenues. As part of its effort to attract foreign investment and diversify the economy, Saudi Arabia acceded to the WTO in 2005 after many years of negotiations. Saudi Arabia is sitting on a land with an abundant wealth of oil. It has the world’s second largest oil reserves and oil accounts for more than 90% of its export’s earnings and 70% of government revenues. Read further to know more on the company registration procedures in Saudi Arabia.

 

Licensing for Saudi Arabia Company Formation

The Saudi Arabian General Investment Authority (SAGIA) is the foreign investment company registration license provider for the Kingdom.

 

Foreign investment during Saudi Arabia Company Formation

100% foreign investment allowed in service sector. However, trading and retail activities is reserved for Saudi National and Saudi owned entity only.

 

Minimum paid up Capital – LLC

* SAGIA may prescribe additional requirements

  • Services: NA but recommended to maintain $0.13m
  • Industrial: SAR 1m ($0.27m)
  • Trading: SAR 20m ($5.33m)
  • Agriculture: SAR 25m ($6.67m)
  • Real estate: SAR 30m ($8m)

 

Corporate tax on Saudi Arabia Company formation

Service Company taxed @20%

Saudi Owned Local companies taxed @2%\ 

 

Accounting and Tax

There is no personal income tax on income earned by individual and employees. However, there are three type of taxes levied on the Companies based on the shareholding structures:

  • (i) Corporate Tax: on all registered entities including companies or branch having foreign ownership.
  • (ii) Withholding tax : on entities making payment to non-residents, such as for rent, loyalties and management fees
  • (iii) Zakat (Islamic wealth tax): Zakat, a religious levy, is charged on the company’s Zakatbase at 2%. Saudi citizen investors (and citizens of the GCC countries, who are considered to be Saudi citizens for Saudi tax purposes) are liable for Zakat. 

Where a company is owned by both Saudi and non-Saudi interests, the portion of taxable income attributable to the non-Saudi interest is subject to Corporate tax, and the Saudi share goes into the basis on which Zakat is assessed.

Corporate Tax Rate for unlisted Company is 20%

 

Basis for Corporate Taxation:

  • Tax is on the net adjusted profits
  • The share of profits attributable to interests owned by non-Saudi / non-GCC nationals is subject to income tax.
  • The share of profits attributable to interests owned by Saudi / GCC nationals is subject to Zakat (religious levy).

Withholding tax rates

  • Rent ………………..……………………………………………… 5%
  • Royalty or proceeds …………………………………….…….. 15%
  • Management fees …………………………………………..…… 20%
  • Payments for airline tickets, air or maritime freight .………….. 5%
  • Payments for international telecommunications services …… 5%
Type Limited Liability Company (WLL)
Under Saudi Law, Foreigners Can own 100% (in certain activities) subject of FSI approval and manufacturing / trading requires local national participation
Share Capital SR 500,000
Director Minimum One
Shareholders Minimum Two
Memorandum & Article of Association Yes
Can the Entity hire Expatriate in Saudi Yes
Saudi Resident Secretary Required Yes
Statutory Audit Required Yes
How Long to open corporate Bank Account 4 Days
Timeframe for Incorporation 6 Months
Annual Return Must be Filed
Annual Tax Must be filed
Access to Saudi Double Tax Treaties Yes