Saudi Arabia company registration

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Saudi Arabia company registration

DOING BUSINESS IN SAUDI ARABIA IN 2017

Since 2003, Healy Consultants Group PLC has been efficiently and effectively assisting our Clients with i) Saudi Arabia business registration ii) business licensing iii) Saudi Arabia business banking solutions iv) visa options and staff recruitment strategies and v) workspace rental solutions.

Summary100% SAGIA LLC51% LLCNational LLCFast business setup solutionCommercial Agency Agreement
Also known asدة مسؤولية ذات شدة مسؤولية ذات شN/AN/Aتفاقية وكالة
Best use of company?All products and servicesAll products and servicesAll products and servicesClose a customer deal nowManufacturing and export trading
How soon can you invoice Clients/sign sales contracts?9 months9 months2 months2 months2 months
How soon can you hire staff?9 months9 months2 months2 months2 months
How soon can you sign a lease agreement?2 months2 months1 month1 month2 months
How long to supply company registration / tax numbers?9 months9 months2 months2 months2 months
How long to supply corporate bank account numbers?10 months10 months3 months2 months3 months
Corporate tax rate on annual net profits?20%20%0%20%0%
Limited liability entity?YesYesYesYesNo

See full table

Government grants available?YesYesYesYesYes
Government approval required for foreign owners?YesYesN/AYesN/A
Resident director/partner/manager/ legal representative required?NoYesYesYesYes
Minimum paid up share capital?At SAGIA's discretionAt SAGIA's discretionUS$50,000minimum US$50,000none
Can bid for Government contracts?YesYesYesYesNo
Corporate bank account location?Emirates NDBBNP ParibasAlimna BankSAABDeutsche Bank
Can secure trade finance?YesYesYesYesYes
VAT payable on sales to local customers?NoneNoneNoneNoneNone
Average total business set up engagement costs?US$75,190US$75,190US$56,540US$128,453US$16,200
Average total engagement period?10 months10 months3 months12 months3 months
Accounting and tax considerations100% SAGIA LLC51% LLCNational LLCFast business setup solutionCommercial Agency Agreement
Statutory corporate tax payable?20%20%0%20%0%
Annual Zakat rate payable by GCC residents only?0%2.5%2.5%2.5%2.5%
Legally tax exempt if properly structured?NoNoNoNoNo
Group HQ tax incentives?NoYes, if KSA/GCC ownedYesYes, if KSA/GCC ownedYes
Must file an annual tax return?YesYesYesYesYes
Must file annual financial statements?YesYesYesYesYes
Must appoint an auditor?NoNoNoNoNo
Access to double taxation treaties?YesYesYesYesNo
Withholding tax on payments to foreign shareholders?5%5%0%5%0%
Company registration100% SAGIA LLC51% LLCNational LLCFast business setup solutionCommercial Agency Agreement
Resident director/partner/manager/ legal representative required?NoYesYesYesYes
Minimum number of shareholders/partners?22111
Maximum shareholding for foreigners?100%49%0%At SAGIA's discretion0%
Can be wholly foreign owned?YesNoNoYesNo
Sponsorship by a local citizen required?NoYesYesNoYes
Minimum statutory paid up share capital?At SAGIA's discretionAt SAGIA's discretionUS$50,000minimum US$50,000none
Security deposit to be kept with Government?NoNoNoNoNo
Shelf companies available?YesYesYesYesYes
Time to incorporate a new entity?9 months9 months2 months2 months2 months
Can easily convert to a PLC?YesYesYesYesYes
Public register of shareholders and directors?YesYesYesYesYes
Can have preference shareholders?YesYesYesYesYes
Business considerations100% SAGIA LLC51% LLCNational LLCFast business setup solutionCommercial Agency Agreement
Good entity for trademark registration?YesYesYesYesNo
Can secure an import and export license?YesYesYesYesYes

Our Client needs to travel to Saudi Arabia for business set up?No
Temporary physical office solutions available?Yes
You need a local resident as bank signatory?Yes
The entity will likely be regulated by?SAGIA and Ministry of Commerce and Investment
Minimum number of directors/managers?1
Monthly VAT reporting to the Government?No
Must sign an office lease agreement during incorporation?Yes
Shareholders & directors documents to be attested/translated?Yes
Each foreign director needs a personal income tax number?No
Foreign director needs a residence visa?No
Foreign bank signatories need a residence visa?Yes
Maximum number of staff allowed?No maximum number for any entity
Expatriate to local staff ratio?2 - 1
Can secure residence visa for business owner?Yes
Other useful information
What will be included in my customer sales invoice?Click link
This country has signed free trade agreements?Yes
This country is a member of WIPO/TRIPS?Yes
This country is a member of the ICSID?Yes
Average custom duties suffered?5%
Government foreign investment approval required?Yes
Average monthly office rental? (US$ per sq m)35
Minimum statutory monthly US$ salary?800
Average monthly US$ salary for local skilled employees?1,580
US$ deposit interest rate? (1 year average)2.89%
Overseas remittance currency controls?None
Banking considerations
Multi-currency bank accounts available?Yes
Corporate visa debit cards available?Yes
Quality of e-banking platform?Satisfactory
Crowd funding available in this country?Yes

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  • Advantages and disadvantages

    Advantages of Saudi Arabia company registration

    Saudi Arabia business registration advantages

    1. Foreign companies are allowed to bid for government contracts and operate in the Kingdom without a Saudi agent or partner;
    2. The Saudi Industrial Development Fund makes interest-free loans to industrial companies of up to 50% of the total cost of the project, including pre-operating costs, investment in fixed assets, and working capital. However, a 50% loan requires Saudi participation which is not less than 50%. If Saudi participation is lower, the loan is reduced proportionally;
    3. To reduce the Kingdom’s dependence on the export of crude oil as the major source of income, the Saudi government welcomes foreign business registration providing i) labor saving equipment and services ii) staff training services iii) all areas of health, personnel, and services iv) food industries utilizing locally abundant agricultural products v) metals manufacturing vi) vehicle manufacturing and vii) solar technologies;
    4. The Kingdom remains by far the largest Arab market, and is one of the world’s main trading nations in terms of goods and services. Saudi Arabia still depends on imports for most of its manufactured items, and many of its food stuffs. Consequently, local residents are hungry for international products and services and are willing to spend on quality;
    5. Foreign companies enjoy exemption from customs duties on the import of machinery, equipment, tools, and spare parts for industrial projects.

    Disadvantages of Saudi Arabia company registration

    1. One of the biggest business challenges is government red tape, bureaucracy, and corruption. When there is ambiguity about Saudi law, it gives rise to corruption and unnecessary delays in executing deals in the country;
    2. A Saudi company suffers corporation tax of 20%. Capital gains are taxed at 20%;
    3. Foreign companies cannot import goods for resale and direct commercial marketing within the Kingdom to Saudi nationals. A Saudi agent or distributor must be appointed. Only Saudi nationals and 100% Saudi-owned companies may import goods. Importers must be licensed by the Ministry of Commerce;
    4. Saudi Arabian business practices and laws still favor Saudi citizens. Saudi litigants have an advantage over foreign parties in almost any investment dispute because of their first-hand knowledge of Saudi law and culture. The dispute settlement process favors local parties in a dispute;
    5. Disputes with Saudi partners causes serious problems for foreign investors. Saudi partners have blocked foreigners’ access to exit visas, forcing them to remain in Saudi Arabia against their will. In cases of alleged fraud, foreign partners may also be jailed to prevent their departure from the country while awaiting police investigation or adjudication of the case. Courts can impose precautionary restraint on personal property pending the adjudication of a commercial dispute;
    6. The government tenders in procurements favor i) Saudi Arabians ii) companies with Saudi nationals at least 51% of the capital iii) products of Saudi Arabian origin;
    7. During business registration and corporate bank account opening, the Saudi Government frequently requests documents to be attested by the Saudi Embassy in the country of origin of our Client. This is both a costly and time consuming exercise and complicates the company incorporation process. Examples of documents include: i) passports copies of directors; ii) parent company certificate of incorporation and M&AA; iii) power of attorney issued by the parent company. To overcome this problem, our Clients’ appoint Mr. Aidan Healy as the temporary nominee shareholder, director and bank signatory.
  • Best uses for a Saudi Arabia company

    Non-oil export companies receive free promotion from the Saudi government, so manufacturing and processing companies are well advised to invest in the country to take advantage of this, as well as the duty-free access to the 17 countries of the Greater Arab Free Trade Area.

Company registration

  • Time to incorporate: Nine weeks
  • Cost to set up: US$75,590
  • Minimum capital: US$26,665
  • Physical office required: Yes

Required appointments

  • Shareholders: 2
  • Directors: 1
  • Company secretary: Yes
  • Resident director: Yes

Key facts

  • Corporate tax rate: 20%
  • Corporate tax base: Territorial
  • Shelf companies: Unavailable
  • Main company type: LLC

Frequently asked questions

Contact us

For additional information on our business registration services in Saudi Arabia, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Chrissi Zamora, directly:
client relationship officer - Chrissi
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