Setting Up Entity in Saudi Arabia

In 2020, Saudi Arabia took dramatic turns to protect its Vision 2030 plans in an atmosphere of global change. On the fronts of economy, employment and in the private sector arena, the Kingdom led a series of globally-followed financial measures to keep its economy on the rising slope it has been ascending since 2016’s Saudi Vision reveal. 

Post-lockdown, foreign investors from all around the world are eyeing the Kingdom’s fertile investment culture as a place to jump start business activity following the COVID-19 rough patch. Saudi Arabia is the largest economy in the Middle East and North Africa region; this is historically due to its oil riches. Today, however, a diversification process opens the doors for new investment opportunities. If you’re looking to do business in the Kingdom, you need to keep in mind the ‘Negative List,’ a list of financial activities reserved for local investors. This list was updated and no longer includes the road transport, real estate brokerage, audiovisual services and recruitment services sectors. 

Foreign investors looking to launch a Limited Liability Company in the Kingdom will need to pass through the gates of the Ministry of Investment (MISA) and the Chamber of Commerce (CoC). The post registration process entails a series of registrations with various governmental authorities. Investment licenses can vary in type–Industrial, Service, Construction and Trading types. Part of a nation-wide digitization process, recent updates made applying at MISA easier; you can now apply online and submit the necessary documents online. 

A commercial registration (CR) must be obtained from the Ministry of Commerce (MOC), and a series of document submissions, approvals and clearances takes place ahead of the incorporation process. This process includes stops at the CoC, the labor office and the Municipality. Part of these registrations is the General Organization for Social Insurance (GOSI), which enforces a Wages Protection System on all private sector entities in order to ensure all employees are compensated fairly. This is followed by registration at the Department of Zakat and Income Tax (DZIT). 

You can take a different approach to doing business in the Kingdom of Saudi Arabia by conducting business through an agent or a distributor. This option grants you the opportunity of leveraging your local agent’s connections and local knowledge. An Agency Law is in place in the Kingdom to manage these deals between investors and local agents/distributors, as well as defining who can act as an agent or distributor. All entities, however, must keep in mind Zakat and Tax, WPS and Saudization. The latter is a Saudi Vision employment scheme aimed to limit and irradiate unemployment among Saudi nationals.