The world’s largest companies are currently heading to Saudi Arabia as the best destination for establishing businesses.

But how difficult -or easy- it actually is the company formation in Saudi Arabia?

How to open a branch of your company in Saudi Arabia to provide your services or sell your products?

The short answer is “not difficult at all” if you know how to do it.

But do you?

This article contains all you need to know about company formation in Saudi Arabia.

You probably know that anyone who wants to establish a company in Saudi Arabia must have a Saudi partner.

Yes, but that is an old law that has been changed.

The new laws in KSA grant an option for non-Saudi foreign companies to open a branch in Saudi Arabia with 100% foreign ownership.

No Saudi citizen required.

In this article we will talk about:

  1. Company Formation Stages in Saudi Arabia.
  2. Company Licenses in Saudi Arabia.
  3. Annual Obligations & Taxes.
  4. Company formation Cost in Saudi Arabia.

 

First: what are Company Formation Stages in Saudi Arabia?

To open a company in Saudi Arabia, you must carry out the following four stages:

1.   Stage One Foreign Company Documents

The first step is preparing the foreign company, which is a basic condition for establishing your Saudi company which is a branch of an existing company in another country. This step takes place in 3 stages, which are preparing documents, financial statements, and documentation:

  1. The first step is to prepare documents for establishing the company from the home country, which differ from country to country.
  2. The second step is to prepare and audit the financial statements for the last year and ensure that they meet the conditions required by the Saudi Ministry of Investment.
  3. The third step is to notarize and authenticate the company’s documents and financial statements and ship them to Saudi Arabia.

2.   Stage Tow Company Registration

The second stage is registration with the Saudi Ministry of Investment and the Ministry of Commerce, which takes place in 3 steps: preparing documents, determining the license, and the commercial registry:

  1. The first step is to prepare the incorporation documents and reserve the trade name for the new Saudi company.
  2. The second step is to determine the type of license for the new Saudi company and complete the process of obtaining the investment license.
  3. The third step is to prepare the commercial register, determine activities, document the articles of incorporation, and publish in the Official Gazette.

3.   Stage Three Registration on Government Platforms

The third stage is to complete registration on government platforms, which takes place in 3 steps:

  1. The first step is to register the company with the Zakat, Income and Tax Authority, extract the company’s tax number, and register the national address.
  2. The second step is registration with the Human Resources and Social Insurance Authority and the Qiwa, Absher, and Muqeem platforms.
  3. The third step is to register the company with the Saudi Business Center and open a bank account.

4.   Stage four Residency Permits

The fourth and final step is work residency permits, which takes place in 3 steps:

  1. The first step is determining the company director and the number of required residency permits.
  2. The second step is to prepare and issue work visas for employees according to their country of residence.
  3. The third step is to obtain work permits from the Ministry of Investment or transfer sponsorship if they reside in Saudi Arabia.

These are the four stages of establishing a company in Saudi Arabia but be careful! They contain tons of small details, and errors here are strictly prohibited.

Each step has many specifics depending on the type of company and the nature of license you are applying for, and it is necessary to have a consultant or a company with you to help you at each stage of registration.

Up to the date of publishing this article, we have established more than 450 companies for people of different nationalities around the world, and you can contact us to help you establish a company in the Kingdom of Saudi Arabia, you can count on HFA Firm as your business setup consultant in Saudi Arabia.

 

Second: What are Company Licenses in Saudi Arabia?

The Kingdom of Saudi Arabia offers many licenses that you can apply for depending on your field of work, and we will mention here the 8 most important licenses:

  1. Agricultural license, which is a license for companies that operate in agriculture.
  2. Audiovisual media licensing for companies that work in audiovisual media.
  3. Commercial license for companies that engage in wholesale and retail trade.
  4. Engineering offices consulting license for companies that provide engineering consulting services.
  5. Entrepreneurial license for entrepreneurs who want to open technical and innovative companies that can expand and grow in Saudi Arabia.
  6. License for printing and publishing activities for companies operating in printing and publishing.
  7. Industrial licensing for all types of industrial activities such as heavy and light industries and manufacturing industries.
  8. Service licensing, this provides a license for many activities such as contracting, information technology consulting, tourism, training, health care, insurance and reinsurance, education, advertising and media, logistics services, organizing exhibitions, catering and nutrition services, financial services, aviation, and handling services.

This is an overview of the most important licenses offered by the Kingdom of Saudi Arabia.

Note that each license contains many details and conditions, and it is very important that you know the details of the license you want to apply for, otherwise your application will be rejected and will pay additional costs.

And remember that HFA Firm is your business setup consultant in Saudi Arabia, please get in touch to know more about the details of the appropriate license for your company.

 

Third: What are Annual Obligations & Taxes in Saudi Arabia?

The Kingdom of Saudi Arabia, just like any other country, has annual taxes and obligations that must be paid.

Some of them are fixed regardless of the company and some are related to the type of your company.

But in general, every company needs to do the following 7 things on a regular annual or quarterly basis:

  1. Renewing the investment license -which is the company’s license- on an annual basis.
    it costs 62 thousand Saudi riyals for most licenses.
  2. Preparing and submitting tax returns and paying a tax of 20% of the net profit, which is a percentage specified by the country and paid annually.
  3. Settlements of the Value Added Tax, Zakat, and Tax Authority which is 15% of sales, and this amount is paid every quarter.
  4. Social Insurance settlements which is 2% of salaries, and this amount is also paid every quarter.
  5. Renewing residency permits for foreigners who work in the company, and this is usually paid annually, with the possibility of renewing a number of months that is less than a year.
  6. Renewals of licenses related to employment such as the municipal license, civil defense license, and the like. These are usually paid every year.
  7. Fees for renewing subscriptions to government electronic platforms regarding company management, which are paid annually.

These fees and costs might look overwhelming, but don’t worry, HFA Firm is your business setup consultant in Saudi Arabia, and we are here to help you every step of the way, contact us now to know more.

 

Fourth: What are Company formation Cost in Saudi Arabia?

Establishing a company in Saudi Arabia requires you to fully understand the costs associated with the process.

  1. First you have the fees for preparing your foreign company if you already have an existing foreign company in another country, or for acquiring a company that meets the conditions so that you can open a branch for it in Saudi Arabia.
    Its price varies according to the country from which you will acquire your foreign company, and you must be aware that this step is very serious because completing the procedures inside the Kingdom differs according to the type of company and the country of origin, it’s also the same regarding the annual obligations that you will have later towards the foreign company, so, you must complete this step with a notarized company.
  2. The second thing is the costs of obtaining the necessary licenses for your activity inside the Kingdom, and this depends on the sector in which you will work. The costs and procedures for obtaining licenses for service activities are usually cheaper than licenses for commercial sectors.
  3. The third thing is the costs of renting offices or workplaces, which vary according to geographical location and size.
  4. The fourth thing is to prepare the office with furniture and equipment according to your business needs.
  5. Finally, you have the fees of lawyers or legal advisors that you may need to assist you with procedures and licenses.

 

In the end, do not hesitate to contact us if you need any type of information regarding establishing your company in Saudi Arabia.

You can contact us on the WhatsApp number in this page or via email, and we will provide you with all the support you need.

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