Company Formation in Saudi Arabia

The Kingdom of Saudi Arabia (KSA), one of the largest economies of the middle east, has emerged as an ideal epicenter for upcoming ventures. KSA attracts investors from around the globe as there are many initiatives undertaken by the governing body to increase businesses. Saudi Arabia allows all kinds of businesses to flourish in its kingdom, be it small, or medium-sized.

Massive reforms in government policies were undertaken to make business setups much easier. Its vision towards economic growth makes it a prominent destination. Moreover, the location of KSA favors the connecting link between trade routes globally. Commercial activities along with enhancement in private sectors are encouraged, and hence starting a business in Saudi Arabia is advantageous. Let’s look into the different aspects of business setup in Saudi Arabia.

Business Opportunities in Saudi Arabia

The Kingdom of Saudi Arabia offers a broad spectrum of business opportunities. As the market is expanding, immense opportunities are available in the following sectors

• Small and Medium Industries
• Industrial Services and Products
• Real Estate
• Manufacturing
• Technology
• Tourism and Hospitality
• Entertainment and Media
• Banking and Security
• Healthcare

Company Formation in Saudi Arabia – Types

KSA allows business owners and investors to establish a company in the jurisdiction under the following legal entities

SMLLC (Single Member Limited Liability Company)

SMLLC (Single Member Limited Liability Company) is a company that can have a single owner. The company owners, known as members, hold all the business shares. While a Single Member LLC (SMLLC) presents advantages, it’s crucial to note that an individual is restricted from opening and owning more than one SMLLC.

JSC (Joint Stock Company)

In a Joint Stock Company, the capital is divided into equal value shares and are owned by share holders. The share holders can transfer, sell, or buy their shares without affecting the company. In order to establish a JSC, the company’s name, purpose, and Memorandum of Association indicating the number of members should be submitted.

LLC (Limited Liability Company)

LLC is the most commonly used business set up in Saudi Arabia, as there is limited liability for the owner in the company’s debt. An LLC allows up to 50 shareholders and each of them needs to sign the MOA. An LLC can appoint one or more auditors as per their business requirements. The legal entity should provide authorities with details regarding management, capital, shareholders, auditors, and other relevant information.

Branch of a Foreign Company

A company utilizing an agency, branch, office, or other business forms within the jurisdiction constitutes a Foreign Company Branch.A branch of an Offshore Company has the authorization to represent and conduct business activities in Saudi Arabia while complying with the laws and regulations of KSA.The use of Arabic for company publications, papers, and documents is mandatory.

The KSA authorities allow one of the mentioned legal entities to carry out businesses in the market. As noted, each of the business types has its benefits and business owners can choose one according to their company requirements.

Starting a Company in Saudi Arabia

The continuous expansion of the business market by expanding its private sector has resulted in a more convenient business setup process. In order to set up a company in Saudi Arabia, the following procedures can be followed

• The first step to start any business in the UAE is to select the type of legal entity mentioned from the above said forms of company.
• The next step involves registering a trading name for the business by selecting a unique company name and location.
• After registering the company name, the subsequent step involves preparing the necessary documents such as valid residency, a copy of the national identity, an investment plan, and the company application procedure.
• The Saudi Arabia General Investment Authority (SAGIA) receives and processes the application for investment licenses. SAGIA regulates all investment activities in Saudi Arabia.
• Open an account at a local bank to deposit the initial capital investment.
• The company is then registered with Commercial Registry at the Ministry of Commerce and Industry and The Chamber of Commerce.
• Obtaining commencement certification and registering with the Department of Zakat and Income Tax (DZIT)

Free Zones in Saudi Arabia

In order to diversify the country’s economy, the economic cities in the Kingdom of Saudi Arabia are offering benefits like tax exemption on custom duties, low tax rates, global connectivity, and exposure to the international market.

Jazan Economic City

Jazan Economic City, a free trade zone focuses on the manufacturing and energy industries. The main areas of focus are human capital, heavy industries, and lifestyle. Jazan Economic city includes different business opportunities like industrial services, technology, employment opportunities, and education. Jazan Economic city accommodates up to 250,000 people while two-thirds of it is occupied by the industrial park.

Prince Abdulaziz Bin Mousaed Economic City

The Prince Abdulaziz Bin Mousaed Economic City located in the northern part is an economic city planned with the intent to focus on five significant sections. This way it helps meet the different economic sectors and industries. The prominent zones are residential, resort zone, educational, agriculture, logistics, and transportation.

King Abdullah Economic City

King Abdullah Economic City is along the Red Sea coast at a distance of 100 km from Jeddah. This economic city is in connection with the surrounding cities of Medina and Mecca, and part of Saudi Arabia’s plan to make the kingdom the best investment destination. Foreign and Domestic Investment is the prime focus of this city. King Abdullah Economic City includes developments in Science and Research, Health Care City, KAEC Media City, and Ethraa.

The Tax Scenario

Implementation and regulation of tax laws in Saudi Arabia are under the jurisdiction of the Department of Zakat and Income tax. Taxation comprises two components: Income tax and Zakat. Income tax is for foreign nationals, while Zakat is a religious levy for KSA or GCC nationals. Registering with the DZIT is a necessary step following company registration in Saudi Arabia to legally conduct business. The following personnel should pay income tax.

• Non-resident investors
• Non-resident with business activities in KSA
• Individuals conducting business activities in the oil and petroleum sector
• Resident companies without KSA shareholding

Why should you consider investing in Saudi Arabia?

Saudi Arabia has flexible corporate laws and lower tax rates making it a suitable destination for investors. Some reasons to invest in Saudi Arabia are

• Economic growth
• Better investment and trading options
• Strategically positioned
• Political stability
• Business-friendly environment

Advantages of setting a business in Saudi Arabia

• A business-friendly environment for both corporate and small businesses alike.
• The numerous reforms undertaken makes starting a business easy and convenient.
• Tax exemptions and Elimination of customs duties are provided by the governing body.
• Access to the marketplace of potential clients.
• Availability of office spaces with world-class amenities.
• Financial incentives for projects that aid in the country’s economy

Our Services for you at Saudi Arabia

Setting up a business is a straightforward process in Saudi Arabia, but considering a business set up service helps make the process handy. At Black Swan Bussiness Setup Service, we provide a wide range of services in less time. We help entrepreneurs, investors, and startups to set their businesses efficiently. Our team of expert advisors also assist with aspects like documentation, accounting formalities, tax consultation, and legal formalities. Ready to launch your business in Saudi Arabia, we are always happy to help you.