Saudi Arabia company registration

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Saudi Arabia company registration

DOING BUSINESS IN SAUDI ARABIA

Since 2003, Healy Consultants 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.

Summary51% locally owned LLCFast solution LLCCommercial AgencyLLPGCC company BranchRep Office
Best use of company?All products and servicesAll products and servicesDomestic market salesProfessional servicesProjects and assignmentsMarket research
SAGIA foreign investment approval required?NoYesNoNoNoNo
Can bid for Government contracts?YesYesNoYesYesNo
How soon can you sign an office lease agreement?1 month2 months3 weeks1 month1 month1 month
How soon can you legally invoice Clients?2 months2 months1 month2 months2 monthsNo
How soon can you hire local staff?3 months2 months6 weeks3 months3 months3 months
You need a Saudi Arabian citizen as a sponsor?YesYesYesYesYesYes
You need a Saudi Arabian citizen as bank signatory?YesYesYesYesNoNo
Wholly foreign owned entity?NoYesNoNoYesYes
Client must travel to Saudi Arabia?NoNoNoNoNoNo
Can secure trade finance?YesYesNoYesYesNo
Limited liability entity?YesYesNoYesNoNo
Government incentives available?YesYesNoYesYesNo
Average total engagement costs?US$65,700US$114,264US$14,200US$54,380US$54,380US$54,380
Average total engagement period?3 months11 months1 month3 months3 months4 months
Accounting and tax considerations51% locally owned LLCFast solution LLCCommercial AgencyLLPGCC company BranchRep Office
Statutory income tax payable? (paid by non-Saudis only)20%20%0%20%0%0%
Annual zakat rate payable? (paid by GCC residents only)2.5%2.5%2.5%2.5%2.5%0%
Must file annual Saudi Arabia tax returns?YesYesYesYesYesYes
Must file annual audited financial statements?YesYesYesYesYesYes
Access to double taxation treaties?YesYesNoYesYesYes
This entity enjoys government incentives?YesYesNoYesYesNo
Withholding tax on payments to parent company?5%5%0%0%5%0%
Company registration51% locally owned LLCFast solution LLCCommercial AgencyLLPGCC company BranchRep Office
Resident director/manager required?NoYesNoNoYesYes
Minimum number of shareholders/partners?1102Parent companyParent company
Maximum shareholding for foreigners?49%100%0%99%100%100%
Minimum number of directors/managers?110111
Minimum statutory paid up share capital?US$27,000US$27,0000US$27,000US$10
Regulated by?SAGIASAGIAMinistry of CommerceSAGIASAGIASAGIA
Shelf companies available?YesYesNoNoNoNo
Time to incorporate a new entity?2 months1 monthCannot2 months2 months2 months
Can have preference shareholders?NoNoNoNoNoNo
Business considerations51% locally owned LLCFast solution LLCCommercial AgencyLLPGCC company BranchRep Office
Can invoice local customers in your company name?YesYesYesYesYesNo
Can hire local staff in your company name?YesYesNoYesYesYes
Can rent local office space in your company name?YesYesNoYesYesYes
Secures a residence visa for business owner?YesYesYesYesYesYes
Good entity for trademark registration?YesNoNoNoYesNo
Other useful information51% locally owned LLCFast solution LLCCommercial AgencyLLPGCC company BranchRep Office

Saudi Arabia has signed free trade agreements?Yes
The country is a member of WIPO and TRIPS?Yes (Link 1 and Link 2)
The country is a member of ICSID?Yes
The country is a member of GCC?Yes
Average customs duties suffered in Saudi Arabia?5%
Average monthly office rental? (US$ per sq. m)US$55
Minimum statutory monthly salary?US$800 (only applicable to Saudi nationals)
Average monthly salary for local employees?US$3,000
Saudi riyal deposit interest rate? (1-year average)1.25%
US$ deposit interest rate? (1-year average)2%
Overseas remittance currency controls?No
Public register of directors and shareholders?Yes
Banking considerations
Multi-currency bank accounts available?Yes
Corporate visa debit cards available?Yes
Quality of e-banking platform?Satisfactory
Crowd funding available in the country?Yes

Press the link headings below to read detailed, relevant, up to date information.

  • 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$59,750
  • 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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