Business Setup in KSA

Saudi Arabia is a significant player in the global economy and is well known for its abundant natural resources and strong economic growth. In recent years, the government has focused on diversifying the economy, pushing away from its reliance on oil and towards other sectors, such as technology, tourism, and construction. As a result, the country has become an attractive destination for business investment.

The economic outlook for Saudi Arabia in 2023 is optimistic, with projections for continued growth and diversification. The government’s efforts to reduce its dependence on oil and focus on developing other sectors are expected to pay off and drive economic growth.

The country is also investing in infrastructure development and increasing its focus on innovation and entrepreneurship, which are anticipated to create new business opportunities and fuel economic growth. Overall, a supportive government, a well-developed infrastructure, and a growing and diversifying economy make Saudi Arabia an attractive destination for investment and business setup.

Foreign direct investment (FDI) has been a critical driver of economic growth in Saudi Arabia in recent years. The country’s favorable business environment, abundant natural resources, and strategic location at the crossroads of Europe, Asia, and Africa have made it an attractive destination for foreign investors. The government has made a concerted effort to encourage FDI by simplifying the investment process and working closely with leading world players such as:

• The US

• The UAE

• France

• Kuwait

• Malaysia

• Singapore

Additionally, foreign investors can take advantage of a lucrative business market that includes industries such as:

• Industrial manufacturing

• Automotive sectors

• Real estate

• Hotels and tourism

• Plastic production

• Coal and gas

• Chemical manufacturing

With its growing economy, well-developed infrastructure, and favorable business environment, Saudi Arabia is poised to continue attracting significant levels of FDI in the future.

Free zones have played a significant role in the diversification of Saudi Arabia’s business market, attracting a wide range of industries and companies to the country. The government has established several free zones in the country, each focusing on a particular industry, such as technology, healthcare, or renewable energy. These zones offer a range of benefits for businesses, including tax exemptions, relaxed regulations, and a streamlined business setup and operation process.

1. Industrial Cities

Industrial Cities are specialized zones that offer businesses in the manufacturing and industrial sectors a range of benefits, including tax exemptions, streamlined regulations, and access to infrastructure and resources. These cities provide businesses with a centralized location to operate and collaborate with other companies in the same industry, helping to spur innovation and growth.

2. Economic Cities

Economic Cities, on the other hand, are large-scale, mixed-use developments designed to create new business and investment opportunities in the country. The government has established several Economic Cities, including:

• King Abdullah Economic City

• Knowledge Economic City

• Prince Abdulaziz Bin Mousaed Economic City

• Jazan Economic City.

These cities offer businesses a range of incentives and benefits, including tax exemptions, relaxed regulations, and a supportive business environment.

Saudi Arabia has long been one of the world’s largest oil-producing countries, but in recent years, it has also rapidly expanded its non-oil industries. With the government’s focus on diversifying its economy through the Vision 2030 plan, there are several compelling reasons to consider investing in the Kingdom:

1. A Growing Nation

Saudi Arabia is one of the fastest-growing economies in the world. The government has been implementing reforms to attract investment and drive economic growth, including developing new industries such as tourism, renewable energy, and technology. These initiatives are helping to spur economic growth and create new opportunities for investors.

2. Emerging Business Opportunities

As the economy expands, new business opportunities are emerging across a variety of sectors. For example, the growing tourism industry creates opportunities for investors in hotels, restaurants, and tourist attractions. The development of renewable energy is also creating opportunities in the production of solar and wind power. Additionally, the growing technology sector is creating opportunities in e-commerce and digital services.

3. Easy Company Setup in Saudi Arabia

Company formation in Saudi Arabia has never been easier. The government has significantly improved the process of registering a company in Saudi Arabia, making it faster and more straightforward than ever before. Additionally, there are many government initiatives aimed at supporting and encouraging small businesses, making it easier for entrepreneurs to start and grow their companies.

4. Double Tax Treaties

Saudi Arabia has several double tax treaties with other countries, which can help reduce the tax burden for international investors. These agreements help ensure that companies and individuals are not taxed twice on the same income, making investing more attractive in the Kingdom.

5. Vision 2030

The government’s Vision 2030 plan is a major driver of change and growth in Saudi Arabia. The plan outlines a series of ambitious goals to diversify the economy and create new opportunities for investors. With the government’s commitment to implementing the Vision 2030 plan, investors can have confidence that the economic outlook for the country is strong and that a supportive business environment will sustain their investments.

When setting up companies in Saudi Arabia, there are several different avenues investors can take. Let’s take a look at just a few legal structures you can choose for your company:

1. Joint Liability Company

A Joint Liability Company is a business owned and run by two or more individuals who are jointly responsible for the company’s debts and liabilities. This type of business is commonly used for small, informal businesses that don’t require a lot of capital.

2. General Partnership Company

A General Partnership Company is similar to a Joint Liability Company but with the addition of a partnership agreement that outlines the responsibilities of each partner. This type of business is generally utilized for small, informal businesses that don’t require a lot of capital.

3. Limited Partnership Company

A Limited Partnership Company is a partnership in which one or more partners have unlimited liability for the company’s debts and liabilities while others have limited liability. This type of business is typically used for larger, more formal businesses that require significant capital.

4. Corporations

A Corporation is a separate legal entity that shareholders own. This type of business is generally employed for large, established companies that require a significant amount of capital.

5. Partnership Limited by Shares

A Partnership Limited by Shares is a type of partnership in which the partners’ liability is limited to the amount of their investment in the company. A Partnership Limited by Shares is typically used for small to medium-sized businesses that require a moderate amount of capital.

6. Joint Venture

A Joint Venture is a type of business that’s owned and run by two or more companies. This type of business is for large, established companies working together on a specific project or venture.

7. Joint Stock Company

A Joint Stock Company is a type of corporation that’s owned by shareholders. This type of business is typically used for large, established companies that require a significant amount of capital.

8. Limited Liability Company

A Limited Liability Company (LLC) is a type of business in which the owners’ liability is limited to the amount of their investment in the company. This type of business is typically used for small to medium-sized businesses that require a moderate amount of capital.

9. Branch Office

A Branch Office is a type of business owned and run by a foreign company. It usually includes companies looking to expand into Saudi Arabia but wants to maintain control over their operations.

10. Representative Office

A Representative Office is a type of business owned and run by a foreign company. This type of business covers companies looking to establish a presence in Saudi Arabia but don’t yet have the resources to start a full-fledged branch office.

11. Variable Capital Companies

A Variable Capital Company is a type of business that’s owned by a single shareholder or a group of shareholders. This type of business is typically used for small, informal businesses that don’t require a lot of capital.

12. Technical and Scientific Offices

A Technical and Scientific Office is a type of business used by companies looking to carry out technical or scientific research in Saudi Arabia. This type of business is typically used by foreign companies that want to establish a presence in the Kingdom.

Whether you’re a seasoned entrepreneur or just starting, there’s never been a better time to set up a business in Saudi Arabia. Here are some of the top business sectors in the Kingdom:

1. Travel and Tourism Businesses

The travel and tourism sector in Saudi Arabia is growing rapidly, driven by the government’s commitment to increasing the number of visitors to the country. This sector is a great opportunity for entrepreneurs looking to set up a business in the travel and tourism sector, whether in hospitality, tour guiding, or adventure sports

2. Hospitality Businesses

The hospitality sector is another growing business opportunity in Saudi Arabia, driven by the increasing number of tourists visiting the country. This sector includes hotels, resorts, and other types of accommodation, as well as restaurants and cafes.

3. Food and Beverage Industry

The food and beverage sector in Saudi Arabia is expanding quickly, driven by increasing demand from a growing population and a thriving hospitality sector. This sector includes everything from fine dining restaurants to fast food franchises.

4. Construction

The construction sector in Saudi Arabia is booming, driven by a growing population and the government’s commitment to investing in infrastructure. This is an excellent opportunity for entrepreneurs looking to set up a construction business, whether in construction management, engineering, or architecture.

5. Cleaning Businesses

The cleaning sector is a growing business opportunity in Saudi Arabia, driven by increasing demand from a growing population and a thriving hospitality sector. This sector includes everything from commercial cleaning services to house cleaning services.

6. FinTech Businesses

The financial tech sector in Saudi Arabia is also seeing a massive level of growth, driven by the government’s commitment to modernizing the financial sector and increasing access to financial services for all. This is an extraordinary opportunity for entrepreneurs looking to set up a FinTech business, whether it be in mobile banking, digital payments, or investment management.

7. Healthcare Sector

The healthcare sector in Saudi Arabia is showing steady evolution, driven by increasing demand from a growing population and a commitment to modernizing the healthcare system.

If you’re considering setting up a business in Saudi Arabia, consider working with a business setup consultant in the Kingdom. These experts can help you navigate the process of setting up a company in Saudi Arabia and ensure you have all the support you need to get your business up and running.

While Saudi Arabia offers a wealth of business opportunities for entrepreneurs, there are some restricted business activities for foreigners in the Kingdom. These restrictions are put in place to ensure the security and stability of the country, as well as to protect specific sectors that are considered sensitive or strategic. Here are some of the restricted business activities for foreigners in Saudi Arabia:

• Oil exploration and drilling

• Manufacturing of military equipment

• Manufacturing of civilian explosives

• Catering to military sectors

• Security and detective services

• Real estate investment in Makkah and Madina

• Tourist guide services to Hajj and Umrah

• Land transportation services

• Printing and Publishing

• Audio-visual and media services

It’s important to note that these restrictions are subject to change, and entrepreneurs should always check with the relevant authorities before setting up a business in Saudi Arabia. If you’re uncertain about the restrictions in a particular sector, consider working with business setup companies in Saudi Arabia. They can help you navigate the process of setting up a company in Saudi Arabia and ensure that you comply with all relevant regulations.

Most investors in the business industry tend to enter the Saudi Arabian market for import and export enterprises. However, the Kingdom of Saudi Arabia has particular regulations that apply to various categories of trades and professionals.

• Most common household goods are exempt from taxation, such as rice, sugar, roasted coffee, livestock, corn, and barley.

• Customs duties of 20% are enforced on imported goods to safeguard domestic infant industries.

• Those working in accounting, auditing, and law professions must secure a permit from the Ministry of Commerce.

• If involved in importing meat products, a “Halal” meat certificate is mandatory.

• Business proprietors involved in exporting seeds and grains must ensure that the product ingredients are printed in both Arabic and English on the packaging.

Starting any company can be a daunting task if you’re unfamiliar with the territory. But to simplify Saudi business setup, we’ve put together a guide on what you’ll need to know.

1. Choose the Industry & Business Structure

The first step in starting a company in Saudi Arabia is to decide on the industry you want to operate in and the business structure that suits your requirements. The most common business structures in Saudi Arabia include a Limited Liability Company (LLC), Joint Stock Company (JSC), and Branch Offices.

2. Select a Trade Name

Once you have decided on your business structure, the next step is to select a trade name for your company. The name must not violate any laws or regulations and must be approved by the Ministry of Commerce and Investment.

3. Develop an Understanding of Saudi Arabia’s Corporate Rules

It is essential to have a thorough understanding of the corporate rules and regulations in Saudi Arabia. This will help you to ensure compliance with all legal requirements and avoid any potential issues in the future.

4. Draft a Business Plan

A well-crafted business plan is crucial to the success of any new venture. It should outline your company’s goals, target market, marketing strategy, financial projections, and other critical details that will help you to secure funding and build a strong foundation for your business.

5. Submit the Essential Documents

Once your business plan is in place, you must prepare and submit the necessary documents to register your company. These documents typically include a Memorandum of Association, Articles of Association, and other relevant certificates.

6. Get the Required Approvals

After submitting the documents, you must obtain the necessary approvals from the Ministry of Commerce and Investment. These approvals can take several weeks, so patience is essential during this process.

7. Secure a Physical Office

To set up a company in Saudi Arabia, you need to have a physical office. Depending on your budget and requirements, you can rent or purchase a property.

8. Get the Government Approvals

Finally, you need to obtain government approvals, such as a commercial registration certificate, tax registration, and social insurance registration.

Registering a company in Saudi Arabia is designed to be easy and straightforward, but the total cost will vary depending on several factors, such as the size of your business, the number of employees, and your business location.

However, you can expect costs to be around:

• SAGIA License: 2000 SAR

• Company Gazette Publication: Between 600 SAR and 5,500 SAR

• Bank Account: Minimal deposit of 100,000 SAR for an LLC

• Office Spaces: 4,000 SAR- 1700 SAR

• Commercial Certificates: 100 SAR- 8,100 SAR

• Chamber of Commerce Membership: 2000 SAR

Overall, the total cost of setting up companies in Saudi Arabia can vary significantly, and you’ll want to work closely with a third-party business setup consultants in Saudi Arabia like MSZ Consultancy to navigate the entire process. These experts are highly knowledgeable in local customs and regulations and can help minimize many of the costs involved with the business setup in KSA.

No matter the industry, MSZ Consultancy is the perfect partner for anyone looking to start a business in Saudi Arabia. With years of experience and a proven track record, MSZ has helped numerous investors navigate the complex landscape of business formation in Saudi Arabia.

Whether securing the necessary licenses, complying with crucial regulations, or handling any other challenges, MSZ has the expertise and knowledge to ensure that you achieve your business objectives.

So, if you’re considering starting a business in Saudi Arabia, don’t hesitate to contact MSZ Consultancy! With our guidance, you can make the most of your new business moves and achieve your entrepreneurial dreams. Contact us today at +971 52 544 1248, and let’s start building your success story together!