Saudi Arabia has emerged as one of the ideal destinations for business and entrepreneurship from across the globe. Thanks to the active government measures and many associated benefits such as the lowest average tariff rate in the Middle East, simplified procedures for company formation in Saudi Arabia, liberal political environment, 100% foreign ownership, lower tax rate and numerous other incentives.
Saudi Arabia has taken steps to simplify business setup for foreign companies through SAGIA, which supports approvals, licensing, and visa processing. Ongoing reforms and investor-friendly policies have positioned it as a top business destination in the MENA region. Key sectors drawing interest include real estate, hospitality, and construction. Here’s a look at the basic requirements and registration process for starting a business in the country. To know more about how to open a branch office in Saudi Arabia, you may get in touch with IMC Group.
Basic Requirements for Registering a Company in Saudi Arabia
- Investment Share Capital – A minimum of Saudi Arabian Riyal (SAR) 5,00,000 is required to register a new company
- Number of Shareholders – As per the law of the country, a company can have at least 2 to a maximum of 50 shareholders.
- Auditor – Every private limited company in Saudi Arabia shall appoint an auditor.
- Application for Company Incorporation – The company incorporation application has to be submitted with the SAGIA along with all the supporting documents.
- Hiring Labour – If a foreign company is willing to hire local employees, it has to first get permission from the Ministry of Labour by submitting the required supporting papers.
- Zakat and Income Tax – Every private limited company in Saudi Arabia has to obtain Zakat and income tax certificate or license from the Ministry of Finance.
Taxation for companies in Saudi Arabia
- Tax Incentives – If a foreign company is registered in certain economic cities located in the under-developed provinces of KSA, it enjoys various tax incentives.
- Tax Free – There is no tax levy on the sales and hiring foreign employees, provided certain conditions are fulfilled.
- Corporate Income Tax – Corporate income tax is levied at the rate of 20% to 45%. However, the rate varies from service to service and product to product.
Documents Required for Company Formation in Saudi Arabia
| Document | Description |
| Investment License Application Form | Submitted to the Ministry of Investment (MISA) to request the license for foreign business activities. |
| Notarized Board Resolution | Lists partners’ names and capital shares, validated through notarization for legal standing. |
| Audited Financial Statements (Last 3 Years) | Company’s financial records reviewed by a certified accountant, showing past financial performance. |
| Articles of Association (AOA) | Defines the company’s internal structure, management responsibilities, and operational procedures. |
| Passport Copies of Shareholders | Clear and valid passport copies for every shareholder involved in the setup. |
| Proof of Identity and Address for Directors and Shareholders | Verification documents, such as IDs or utility bills, confirming identities and residential addresses. |
| Approval from Relevant Saudi Ministry | Written consent from the concerned authority based on the company’s sector and business nature. |
| Attested Power of Attorney | Legal authority assigned to a representative to act for the company, verified through proper attestation. |
Business Structures in Saudi Arabia
Structure | Key Features |
Limited Liability Company (LLC) | 2–50 shareholders; liability limited to share capital; minimum capital SAR 500,000 |
Foreign Branch Office | Requires approval from MCI; subject to Foreign Investment Law |
Commercial Agency | Foreign entities appoint a local Saudi agent; regulated by MCI |
Joint Stock Company | Minimum 5 shareholders; liability limited to share capital; capital requirements: SAR 2 million (private), SAR 10 million (public) |
Technical & Scientific Office | Provides support services; cannot engage in commercial activities; requires MCI license |
Process of Company Incorporation in Saudi Arabia for Foreign Investors
- Reserve the Company Name
Submit a name reservation request through the Ministry of Commerce and Industry’s online portal. - Submit the Articles of Association
Prepare and submit the Articles of Association to the Ministry of Commerce and Industry for approval and official stamping. - Notarize the Articles of Association
Visit the Notary Public to notarize the stamped Articles of Association. - Open a Local Bank Account
Set up a corporate bank account with a local Saudi bank to deposit the required initial capital. - Obtain an Investment License from SAGIA
Apply for and secure the investment license through the Saudi Arabian General Investment Authority (SAGIA). - Receive the Certificate of Registration
Upon securing the necessary approvals, obtain the company’s Certificate of Registration. - Register with Required Government Authorities
Complete registrations with other relevant authorities such as:- General Authority of Zakat and Tax (GAZT)
- General Organization for Social Insurance (GOSI)
- Municipality (for commercial license)
- Chamber of Commerce and Industry
FAQs
1. What types of companies can be registered in Saudi Arabia?
2. Is it necessary for foreign companies to have a Saudi partner?
3. What is the minimum capital required to set up a company in Saudi Arabia?
4. How long does it take to register a company?
5. What documents are needed for company registration in Saudi Arabia?
6. What tax obligations do companies have in Saudi Arabia?
7. Are there restrictions on foreign investors in certain sectors?
8. Is a physical office address mandatory for registration?
