Description of key considerations for registering a business in Saudi Arabia

To register a company in Saudi Arabia, it is necessary to fully understand all aspects of the local situation, make full preparations, strictly abide by relevant laws and customs, and pay attention to the details of each link in order to successfully complete the registration and achieve the sustainable development of the company. The following Zhuo Xin Xiaobian details the main considerations for registering a business in Saudi Arabia.

Saudi registered company notes

1, Business Environment Analysis

as an economic power in the Middle East, Saudi Arabia has vigorously promoted economic transformation in recent years, aiming to reduce its dependence on the oil industry and actively develop non-oil fields, such as manufacturing, technology, finance, and tourism. Through a series of policy measures such as the "2030 Vision", the government has continuously optimized the business environment and attracted foreign direct investment. However, at the same time, the Saudi market also has certain characteristics. For example, its consumer market is greatly influenced by religious culture, and business activities will be adjusted during Ramadan; market competition is fierce, local companies have deep roots in some areas, and foreign companies need to be fully prepared to gain a foothold.

(2) The legal framework follows

the Saudi legal system is based on sharia law, which has a profound impact on many aspects of business operations. In terms of commercial regulations, the establishment, operation, taxation, labor and other links of enterprises must strictly abide by local laws. For example, the Saudi company law has clear provisions on the establishment conditions, equity structure and governance mechanism of different types of companies; in tax laws and regulations, enterprises need to understand the declaration and payment requirements of value-added tax, enterprise income tax and other taxes; labor laws and regulations protect the rights and interests of workers in terms of employee employment, working hours, welfare benefits and dismissal procedures, and enterprises must strictly implement them.

3. Company type choice

saudi Arabia allows foreign investors to set up enterprises in various forms, such as sole proprietorship, joint venture or cooperation. Common types of companies are limited liability companies (LLC) and joint stock limited companies (JSC). Limited liability companies are flexible and usually require at least two shareholders, one of whom may be a Saudi national or a Saudi entity, and the Saudi shareholder's shareholding is generally not less than 25%, and the shareholder is liable to the company to the extent of his or her capital contribution. Limited companies are more suitable for large-scale enterprises or companies with listing plans, but the establishment requirements are higher, involving more public disclosure and regulatory requirements. Foreign enterprises should carefully choose the type of company according to their own business objectives, investment scale, risk tolerance and other factors.

4. Determination of business scope

when determining the scope of business, enterprises should clarify the main business activities and ensure compliance with Saudi economic policies and laws and regulations. Some industries have special requirements or restrictions on foreign investment, such as energy, banking, defense and other fields, which may require additional approval or restrictions on the proportion of foreign ownership. Enterprises can consult the relevant policy documents issued by the Saudi Ministry of Investment in advance to understand the access conditions of the target industry and avoid the risk of registration or subsequent operation due to improper selection of business scope.

Saudi Company Registration Process and Compliance Requirements

1. Name pre-approval

apply for company name review through the Saudi General Administration of Commerce and Investment (MISA) system. The name must comply with local culture and regulations to avoid duplication. Non-Arabic names are now allowed (under the new commercial law amendment).

Application for Foreign Investment Permit (MISA)

submit the business plan, articles of association (notarized in Arabic), parent company documents (business license and articles of association shall be notarized by the Chinese notary office → certified by the Ministry of Foreign Affairs → signed by the Saudi Embassy in China) and other materials.

Approval time: usually 5-10 working days, some industries (such as manufacturing, information technology) can be accelerated to 2-4 weeks.

3. Registration of the Ministry of Commerce and Final Appeal of the Chamber of Commerce and Industry

submit MISA approval documents, articles of association, list of shareholders, etc., and issue a business registration certificate (CR) after verification by the Ministry of Commerce (1 week) and final review by the Chamber of Commerce and Industry (TCCI) (1 week).

4. Tax and social security registration

value Added Tax (VAT): The tax rate is 15%. You need to register your tax number and submit bank account information through the ZATCA portal.

Enterprise income tax: the standard tax rate of 20%, new energy, AI enterprises can enjoy 5 years of tax exemption + the subsequent 10 years of halving the levy, special economic zone enterprises superimposed equipment import tariffs are free.

Social security payment: social insurance is paid for employees on GOSI platform (9% for employers and 3% for employees), and manufacturing industry needs to employ at least 14% Saudi employees (science and technology enterprises can be exempted).

5, bank account opening and capital verification.

It is necessary to deposit the registered capital (manufacturing 500000 riyals are required to be paid in, trade 30 million riyals are required to be paid in) and obtain a bank confirmation letter as one of the registration materials.

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