{"id":43934,"date":"2024-05-08T16:28:50","date_gmt":"2024-05-08T12:28:50","guid":{"rendered":"https:\/\/www.savoryandpartners.com\/?p=43934"},"modified":"2024-05-08T18:18:46","modified_gmt":"2024-05-08T14:18:46","slug":"setting-up-a-business-in-saudi-arabia","status":"publish","type":"post","link":"https:\/\/old.savoryandparnters.com\/blog\/setting-up-a-business-in-saudi-arabia\/","title":{"rendered":"Setting Up a Business in Saudi Arabia: 2024 Comprehensive Guide"},"content":{"rendered":"

Setting up a business in Saudi Arabia (KSA) is an enticing prospect for international enterprises, attracting foreign investment, given its robust economy and favourable environment.<\/p>\n

Navigating the process requires a keen understanding of the regulations and steps involved. This detailed guide aims to elucidate the process, focusing on establishing a Limited Liability Company (LLC) and the essential aspects of the Ministry of Investment (MISA) licence application to obtaining a residency permit. This piece will highlight the process of establishing a company in the Kingdom of Saudi Arabia.<\/p>\n


\nWhat are Types of Corporate Formations in Saudi Arabia?\u00a0<\/strong><\/span><\/span><\/em><\/h2>\n

 <\/p>\n

Before delving into the corporate setup process, it’s essential to understand the types of company formations permitted in Saudi Arabia (KSA).<\/span> \u00a0<\/span><\/p>\n

There are five types:<\/span> \u00a0<\/span><\/p>\n

    \n
  1. Joint liability companies,<\/span> \u00a0<\/span><\/li>\n
  2. Limited partnership companies,<\/span> \u00a0<\/span><\/li>\n
  3. Joint ventures,<\/span> \u00a0<\/span><\/li>\n
  4. Joint stock companies, and<\/span>\u00a0<\/span><\/li>\n
  5. \u00a0L<\/span>imited liability companies (LLC).<\/span><\/li>\n<\/ol>\n

    Among these, LLC, also known as a Subsidiary Company, is <\/span>favoured<\/span> by foreign investors due to its higher risk aversion, greater flexibility, and overall registration and funding simplicity.<\/span><\/span><\/p>\n

     <\/p>\n

    Read Now: Common Mistakes When Applying to a Business Immigration Program<\/strong><\/em><\/a><\/p>\n


    \nSteps Of Setting Up a Business in Saudi Arabia\u00a0<\/span><\/span>\u00a0<\/span><\/strong><\/em><\/h2>\n

    \u00a0<\/span><\/em><\/h2>\n

    Initiating your business in Saudi Arabia starts with the <\/span>Ministry of Investment (MISA).<\/span><\/a> MISA, previously known as the Saudi Arabian General Investment Authority (SAGIA), is the primary body that oversees foreign investments. International corporations intending to set up in Saudi Arabia need to procure a foreign investment licence from MISA.\u00a0<\/span>\u00a0<\/span><\/p>\n

    The licence application involves specific criteria that must be met, aiding MISA in ensuring your business in Saudi Arabia aligns with their regulations and development plans. Once the licence is granted, your company can commence expansion plans, contributing to the growth of the Saudi Arabian economy. Usually, the processing time for licence applications ranges between 2-4 weeks. Remember to renew your licence annually to maintain your company’s compliance with the regulations in Saudi Arabia.<\/span><\/p>\n

     <\/p>\n

    Step <\/span>1<\/span>: Register For Commercial Registration with the Ministry of Commerce<\/span><\/span><\/strong><\/em><\/h3>\n

    Upon <\/span>MoC’s<\/span><\/a> approval, your company’s commercial registration (CR) is electronically issued, which acts as your company’s certificate of incorporation and local trade license. The usual timeframe for issuing the CR is 2-4 weeks, subject to external licensing approval times. Annually renew your CR to maintain its validity.<\/span><\/p>\n

     <\/p>\n

    Step <\/span>2<\/span>: Register with the Chamber of Commerce<\/span><\/span><\/strong><\/em><\/h3>\n

    A crucial component of your business setup is the registration with the Chamber of Commerce (CoC) in Saudi Arabia. The CoC functions as a significant platform for verifying and legalizing all corporate documents issued by companies. This step is mandatory to carry forward post-licensing procedures and visa issuance for employees. By availing of the CoC’s services, your company guarantees the authenticity and validity of its documents.<\/p>\n

     <\/p>\n

    Step 3<\/span>: Ensuring Compliance with the Ministry of Labor<\/span><\/span><\/strong><\/em><\/h3>\n

    To issue work permits and visas for non-Saudi employees, it is mandatory for your company to register with the Ministry of Labour (MoL). Adherence to MoL’s regulations and rules is essential, and upon completing registration, your company is eligible to apply for work permits and visas for its non-Saudi workforce.<\/p>\n

     <\/p>\n

    Step 4<\/span>: Pay and Register with General Organization for Social Insurance (GOSI)<\/span><\/strong><\/em><\/h3>\n

    To pay and register for employee social insurance in KSA, companies need to follow these steps:\u00a0<\/span><\/span><\/p>\n

    1. Company Registration:\u00a0\u00a0<\/span><\/span><\/strong><\/h4>\n

    On the General Organization for Social Insurance (GOSI) platform, companies in Saudi Arabia should register before hiring Saudi and non-Saudi nationals. The company needs to provide details such as company name, address, contact information, and legal documents.\u00a0<\/span><\/span><\/p>\n

    2. Employee Registration:\u00a0\u00a0<\/span><\/b><\/h4>\n

    Once your company is registered on the GOSI platform, you can proceed to register each employee. Saudi nationals should be registered as officers of the company, and non-Saudi nationals need to be registered individually.<\/span><\/p>\n

    3. Social Insurance Payments:\u00a0\u00a0<\/span><\/b><\/h4>\n

    Post-employee registration, your company is responsible for paying social insurance contributions monthly. The total amount payable is calculated based on the number of registered employees and their respective salaries, which should be submitted via the GOSI platform.\u00a0<\/span>\u00a0<\/span><\/p>\n

    The GOSI platform serves as a centralised system for managing social insurance registration and payments. Companies can use the platform for various tasks such as employee registration, payment submission, and accessing reports, ensuring secure and efficient handling of social insurance matters.<\/span><\/p>\n

     <\/p>\n

    Step <\/span>5<\/span>: Engage with the Zakat, Tax & Customs Authority<\/span><\/span><\/strong><\/em><\/h3>\n

    Every company operating in Saudi Arabia must register with the Zakat, Tax, and Customs Authority (ZATCA). Following registration, companies are required to fulfill their tax obligations, which includes withholding tax payments, VAT filing, and corporate income tax payments.\u00a0<\/span>\u00a0<\/span><\/p>\n

    ZATCA provides an online portal to manage these tax-related activities. Here, companies can calculate and process withholding tax payments, file their VAT returns, calculate and make corporate income tax payments, and access customs services and payment of import\/export-related fees.\u00a0<\/span><\/p>\n

    This portal offers a one-stop solution to manage all tax-related services, which plays a crucial role in ensuring your company’s compliance with the tax laws and regulations of Saudi Arabia.<\/span><\/span><\/p>\n

     <\/p>\n

    Step <\/span>6:<\/span> Register for the National Address<\/span><\/span><\/strong>
    \n<\/span><\/strong><\/span><\/em><\/h3>\n

    A crucial requirement <\/span>in the process of registering<\/span> a business in Saudi Arabia is the submission and registration of a physical office address. Once <\/span>established<\/span>, the office address must be registered with Saudi Post (SPL) as the company’s correspondence address. This national address <\/span>facilitates<\/span> services such as e-commerce and postal services.\u00a0<\/span><\/span><\/p>\n

     <\/p>\n

    \"Setting

    Once you’ve successfully established your business entity in Saudi Arabia, securing a residency permit becomes essential to guarantee the legal presence of both yourself and your key personnel.<\/p><\/div>\n

     <\/p>\n

    Step 7: Obtain the General Manager Visa & Iqama<\/strong><\/em><\/h3>\n

    The General Manager (GM) of your company needs to acquire a working visa from their country of origin to facilitate their legal entry into Saudi Arabia. Once they’ve arrived, the working visa can be converted to an exit and re-entry visa, providing them the flexibility to travel as necessary.\u00a0<\/span>\u00a0<\/span><\/p>\n

    Following their arrival, the GM needs to obtain a residence permit, or Iqama, which serves as a legal document for their residency and employment in Saudi Arabia.<\/span><\/p>\n

     <\/p>\n

    Step 8: Register with Absher, Muqeem, and QIWA Portal<\/strong><\/em><\/h3>\n

    For managing and maintaining company operations, including employment activities such as visa and Iqama issuance, renewal, and cancellation, registration with Saudi government portals such as Absher, Muqeem, and QIWA is mandatory.<\/span><\/p>\n

     <\/p>\n

    Step <\/span>9<\/span>: <\/span>Finalise<\/span> the Bank Account Opening Process<\/span><\/span><\/span><\/strong><\/em><\/h3>\n

    With the completion of the steps mentioned above, your company is now ready to open a corporate bank account in Saudi Arabia. The process usually takes an <\/span>additional<\/span> 2-4 weeks, depending on the company’s ownership structure complexity and the chosen bank’s Know Your Customer (KYC) requirements.<\/span><\/span><\/span><\/span><\/p>\n

     <\/p>\n

    Step 1<\/span>0:<\/span> Obtain Residency Permit<\/span><\/span><\/strong><\/em><\/h3>\n

    After successfully navigating the process of setting up a business entity in Saudi Arabia, obtaining a residency permit is the definitive step for ensuring the legal presence of yourself and key personnel. This involves submitting the necessary documents to the relevant authorities and adhering to the regulations set forth for residency permits.\u00a0<\/span>\u00a0<\/span><\/p>\n

    If you are registered as the GM, then you will have issued your residence permit during the steps of establishing your company. If not, then you can issue a residence permit for yourself in any other position (such as Chairman or otherwise). This process can be completed during the process as well.\u00a0<\/span>\u00a0<\/span><\/p>\n

    Establishing a business in Saudi Arabia is a systematic process, which, when navigated with the right understanding and expertise, can pave the way for a successful venture in the KSA market.\u00a0<\/span>\u00a0<\/span><\/p>\n

    To learn more about starting a business activity in KSA, contact Savory & Partners to speak to one of our experts.<\/span><\/p>\n

     <\/p>\n

    Don’t miss: A Businessperson\u2019s Guide to Residency & Second Citizenship<\/strong><\/em><\/a><\/span><\/span><\/p>\n


    \nSummary of how to form an LLC in KSA<\/strong><\/em><\/h2>\n

     <\/p>\n

    1. Appeal for Investment Licence from SAGIA<\/strong>
    \n<\/span><\/strong><\/em><\/h3>\n

    Once you have received your MISA license, the following step is registering your company with the Ministry of Commerce (<\/span>MoC<\/span><\/a>). As the official registrar for any business in Saudi Arabia, <\/span>MoC<\/span><\/a> requires you to formulate the Articles of Association (AoA) as per the Saudi Companies Law.\u00a0<\/span>\u00a0<\/span><\/p>\n