Business Setup FAQs in Saudi Arabia الأسئلة الشائعة حول تأسيس الشركات في السعودية

Yes, foreign investors can own 100% of a company in Saudi Arabia in many sectors. This is made possible through a foreign investment license issued by the Ministry of Investment of Saudi Arabia.

However, some activities remain on a "negative list" and may require Saudi partnership or are restricted to Saudi nationals. These include certain real estate services, some security services, and specific activities in Makkah and Madinah.

The typical timeline for company formation is 4-8 weeks from complete document submission to operational readiness. This includes:

• Ministry of Investment of Saudi Arabia license: 1-4 weeks
• Commercial Registration (CR): 3-7 days
• Tax registration with ZATCA: 3-5 days
• Bank account opening: 1-2 weeks

Sector-specific licenses may add 1-3 weeks to the timeline.

For a Limited Liability Company (LLC), there is no minimum capital requirement for most activities. However, certain sectors have specific requirements:

• General trading and services: No minimum
• Industrial activities: SAR 1 million or more
• Real estate development: SAR 30 million
• Some professional services: May vary

The Ministry of Investment of Saudi Arabia may set capital requirements based on your specific business activities.

These are two separate government bodies with different roles:

Ministry of Investment of Saudi Arabia: Issues investment licenses to foreign investors. This is required before any foreign-owned entity can operate in Saudi Arabia. The license grants permission to invest and specifies allowed activities.

Ministry of Commerce: Handles commercial registration (CR), company documentation, and ongoing business governance. All companies (Saudi and foreign-owned) must register with the Ministry of Commerce.

For foreign investors, the process is: Ministry of Investment of Saudi Arabia license first, then Ministry of Commerce registration.

Not necessarily. Much of the company formation process can be completed remotely with a service provider like CJC Group handling applications on your behalf.

The Ministry of Investment of Saudi Arabia application process is fully digital. However, certain steps may require physical presence:

• Bank account opening (some banks require in-person verification)
• Signing certain documents (can often be done via Power of Attorney)
• Collecting physical IDs and documents

Typical documents required include:

• Commercial registration of the parent company (for foreign companies)
• Audited financial statements (usually last 1-2 years)
• Board resolution approving Saudi investment
• Passport copies of shareholders and proposed managers
• Articles of Association (will be drafted for the Saudi entity)
• Power of Attorney (if using a representative)

Documents from outside Saudi Arabia typically need to be attested at the Saudi embassy in the origin country.

Tax obligations depend on ownership structure:

• Saudi-owned portion: Subject to 2.5% Zakat on taxable base
• Foreign-owned portion: Subject to 20% Corporate Income Tax
• All companies: 15% VAT on taxable supplies

Companies must register with the Zakat, Tax and Customs Authority (ZATCA) and file regular returns. Annual audited financial statements are required.

Saudization (also known as Nitaqat) is Saudi Arabia's labor localization program that requires companies to employ a certain percentage of Saudi nationals.

The required percentage varies by industry sector and company size. Companies are classified into zones (Platinum, Green, Yellow, Red) based on their compliance level. This affects:

• Ability to obtain work visas for foreign employees
• Access to government services and contracts
• Ability to renew commercial registration

CJC Group can advise on Saudization requirements for your specific industry.

Yes, companies must maintain a physical office address in Saudi Arabia for official correspondence and regulatory compliance. This is required for:

• Commercial Registration
• Municipality license
• Employee visa processing

The office requirements depend on your business activities and sector. Some businesses may start with a serviced office arrangement before establishing a permanent location.

The Regional Headquarters (RHQ) program requires multinational companies wishing to access Saudi government contracts to establish their Middle East regional headquarters in Saudi Arabia.

Key requirements include:

• Physical headquarters presence in Saudi Arabia
• Regional management functions based in Saudi Arabia
• Compliance with employment and Saudization requirements

This program is managed by the Ministry of Investment of Saudi Arabia and is mandatory for companies seeking government contracts.