Complete Guide to Business Setup in Saudi Arabia
Setting up a business in Saudi Arabia can be a game-changer for foreign investors and companies looking to expand into the Middle East’s largest economy.
With an economy over $1 trillion strong and ambitious growth plans under Vision 2030, the Kingdom is actively welcoming international entrepreneurs.
In the first half of 2025 alone, Over 184 foreign companies moved their regional headquarters to Saudi Arabia. This surge in interest is no surprise – Saudi Arabia offers 100% foreign ownership in most sectors, tax incentives, and a strategic location.
However, understanding how to start a business in Saudi Arabia is crucial to tap into these opportunities effectively.
In this guide, we walk you through the company formation in Saudi Arabia process, key considerations, and tips to ensure a smooth business setup in Saudi Arabia.
As a leading business setup consultancy in Dubai, with a branch office in Riyadh KSA, , we at CBS share our expertise to help demystify the process and set you up for success.
Why Invest in Saudi Arabia?
Saudi Arabia has transformed into an investment hotspot, making it an attractive destination for SMEs and multinationals alike.
Under Vision 2030 – the country’s blueprint for economic diversification – the government has rolled out reforms to reduce bureaucracy and encourage foreign participation.
This means doing business in Saudi Arabia has never been easier. Key advantages include:
- Robust Economy & Market Size: Saudi Arabia boasts the largest economy in the Middle East, with a high GDP and a growing population offering strong consumer demand.
The government is investing heavily in sectors like tourism, technology, renewable energy, and manufacturing to broaden its economic base beyond oil.
- 100% Foreign Ownership: Thanks to liberalized investment laws, international investors can now establish companies with full foreign ownership in most industries.
Sectors such as retail, e-commerce, consulting, and manufacturing are fully open to foreign capital, with only a few strategic areas remaining restricted. This level of openness is a dramatic shift from a decade ago.
- Incentives & Tax Benefits: The Saudi government offers enticing incentives: tax breaks, customs duty exemptions, and grants for high-priority industries.
Corporate tax is a flat 20% on foreign-owned businesses’ profits (Saudi or GCC nationals’ share is subject to Zakat instead of tax) – competitive by global standards.
There is no personal income tax on salaries, which can be a draw for expatriate talent.
- Vision 2030 Reforms: Massive reforms are underway to improve the business climate. Processes have been streamlined with one-stop digital platforms, and requirements like minimum capital for certain businesses have been relaxed.
A new Investment Law effective 2025 further levels the playing field for foreigners, eliminating the need for a separate foreign investor license (formerly the SAGIA/MISA license).
In essence, foreign investors are to be treated the same as local investors, and nearly all activities not on a short excluded list are open for investment.
- Strategic Location: Located at the crossroads of Asia, Africa, and Europe, Saudi Arabia offers access to a broad regional market.
It’s a gateway to the GCC market and has modern infrastructure (ports, airports, industrial cities) supporting international business operations.
Choosing the Right Business Structure in Saudi Arabia
One of the first steps in Saudi Arabia company formation is choosing an appropriate legal entity. The structure you select will determine ownership rules, liability, and regulatory obligations.
In Saudi Arabia, foreign investors typically consider these structures:
- Limited Liability Company (LLC): The most popular format for foreign businesses. An LLC requires at least one shareholder (it can be a one-person company) and offers limited liability protection.
It’s flexible in management and suitable for most small and medium ventures. You can setup an LLC with 100% foreign ownership with approval from the Ministry of Investment (MISA).
In some regulated sectors, you might need a Saudi partner or meet special capital requirements, but generally an LLC is the go-to choice for independent operations.
- Joint Stock Company (JSC): A JSC is a better fit for larger corporations or those planning to go public. It allows the issuance of shares to raise capital.
JSCs have higher initial capital requirements (at least SAR 500,000 for a closed joint stock company) and more complex governance. This structure is often used by companies eyeing large projects or eventually listing on the Saudi stock exchange.
- Branch Office: If you have an existing foreign company and want to operate in Saudi without creating a separate subsidiary, you can register a branch.
A branch can be 100% foreign-owned and conducts business under the parent company’s name. It still requires obtaining the necessary license and commercial registration.
Branch offices are common for foreign companies executing contracts in Saudi Arabia or testing the market, but note that the parent company remains fully liable for the branch’s activities.
- Joint Venture or Partnership: Foreign companies can also partner with a local Saudi firm to form a joint venture (either as an LLC with joint ownership or a contractual partnership).
While not required in most sectors, a local partner can bring market knowledge and help in sectors where local involvement is advantageous.
We often advise on structuring JVs to ensure our foreign clients retain control while leveraging local expertise.
- Representative Office: This is a liaison office primarily for market research or promotion of the parent company.
It cannot engage in commercial profit-making activities. It’s less common, but an option if you just want a foot on the ground to explore opportunities before fully committing.
At CBS, we help investors evaluate the options and decide which company formation in Saudi Arabia best meets their needs – balancing flexibility, compliance, and risk.
How to Start a Business in Saudi Arabia: Step-by-Step Process
While the Kingdom has simplified procedures, there are still several steps and approvals to go through for a successful business setup in Saudi Arabia.
Here’s a step-by-step overview of how to go from idea to a fully registered company:
1.Reserve a Company Name:
Begin by choosing a unique business name and reserving it with the Ministry of Commerce. The name must meet Saudi naming rules (e.g. no offensive terms, and preferably meaningful).
2.Obtain Initial Foreign Investment License (MISA Approval):
For foreign investors (non-GCC), traditionally the first major step is to apply for an investment license from the Ministry of Investment (MISA).
You submit an application detailing your business plan, activities, and capital. With recent changes, this process is becoming more streamlined – the new law aims to remove this separate licensing step.
As of now, securing the MISA license (formerly known as a SAGIA license) is still a key step to get the green light for 100% foreign ownership. MISA acts as a one-stop shop that will issue an approval certificate for your company.
3.Prepare Incorporation Documents:
Simultaneously, prepare the necessary documents for incorporation.
These typically include your Articles of Association (detailing the company’s structure and rules) and, if you are an existing company opening a Saudi branch or subsidiary, legalized copies of your parent company’s Certificate of Incorporation, board resolution to invest abroad, and Power of Attorney for your representative.
All documents must be notarized and, where required, translated into Arabic by a certified translator.
4.Notarize the Articles of Association:
Once the MISA approval is obtained, the founding shareholders (or their authorized representative) must notarize the company’s Articles of Association in Saudi Arabia.
This is done through the Ministry of Commerce or a public notary. The notarized AoA is a foundational legal document for the company.
5.Obtain Commercial Registration (CR):
After notarization, the Ministry of Commerce will issue the Commercial Registration (CR) – essentially the company’s business license and registration number.
This officially creates your company as a legal entity in Saudi Arabia. You will receive a certificate of registration.
6.Register for Government Services:
The next step is to register your new company with various government authorities. This includes:
- Tax Authority (ZATCA): Register for VAT if your activities are taxable and your revenue will exceed the threshold (currently SAR 375,000 annually for VAT registration).
All foreign-owned companies are also subject to corporate tax on profits, so registration with ZATCA is required.
- General Organization for Social Insurance (GOSI): If you plan to hire employees, enroll with GOSI for social insurance of employees.
- Ministry of Human Resources (Labor): Open a file with the labor ministry to be able to hire staff and so you’re accounted for Saudization compliance.
- Municipality and Others: Depending on your business, you may need a municipal license (Baladiya) for your office/shop and any sector-specific approvals (for example, health ministry approval for a medical clinic, etc.).
7.Open a Corporate Bank Account:
With your CR and other documents in hand, you can open a corporate bank account in a local bank. This is needed to deposit the startup capital (if required) and to handle business transactions.
Saudi banks will require your company documents and identification of the authorized signatories. It’s often necessary to have the national address registration for your office before opening the account.
8.Fulfill Saudization Requirements:
As your business gets off the ground, remember the Saudization policy (Nitaqat program) which mandates hiring a certain percentage of Saudi nationals.
The required ratio varies by company size and industry – for example, an SME might need a smaller percentage than a large enterprise, and some sectors have higher quotas than others. Ensuring compliance with these hiring rules is important to avoid penalties or issues in renewing your licenses.
9.Post-Incorporation Compliance:
After setup, maintain good standing by filing tax returns (for VAT or corporate tax) on time, renewing any licenses annually, and keeping proper corporate records.
Also, if any changes occur (e.g. adding a new business activity or a new partner), update the authorities accordingly.
Each of these steps involves specific procedures, and the timeline can range from a few weeks to a few months depending on the complexity of your business.
Without guidance, company setup in Saudi Arabia can even stretch to 9-12 months in some cases. The good news is that with preparation and the right support, the process is very manageable.
We at CBS assist clients at every step – from compiling documentation, liaising with MISA and other authorities, to opening bank accounts – to drastically cut down the time and effort required.
Key Considerations for a Smooth Company Formation in Saudi Arabia
Successfully starting a business in Saudi Arabia is not just about paperwork; understanding the local context is equally important:
- Local Partner or Sponsor: In most sectors, you do not need a local Saudi partner thanks to liberal ownership rules.
However, certain activities (like oil exploration or security services) remain on the restricted list for foreigners. If your business falls in such an area, you might need to partner with a Saudi or get special permission.
- Capital Requirements: Saudi Arabia no longer enforces high minimum capital requirements for most ordinary LLCs – many can be started with a modest capital that is sufficient for the business needs.
That said, some categories of business licenses (for example, international trading or industrial projects) might stipulate a minimum investment.
On average, setting up a standard foreign-owned LLC can cost from around SAR 25,000 to SAR 75,000 (US$6,600 to $20,000) in government fees and basic expenses, depending on the license type and use of consultants.
- Cultural Nuances: Building a presence in Saudi Arabia is as much about relationships as it is about regulations.
The business culture in KSA values trust, personal connections, and respect for local customs. Face-to-face meetings, patience in negotiations, and understanding Islamic customs (like prayer times and Ramadan schedules) all go a long way in establishing credibility.
We often accompany our clients to key meetings to help bridge any cultural gaps.
- Ongoing Local Compliance: After your entity is established, remember to stay on top of local compliance.
This includes annual license renewals, filing financial statements if required, renewing your municipality license, and adhering to any sector-specific regulations.
Labor laws (for instance, limits on working hours, visa rules for expat employees, etc.) must be followed diligently.
Having local PRO (Public Relations Officer) support or a consulting partner can greatly ease these ongoing tasks.
At CBS, we provide continuous compliance support so that your company remains in good standing year after year.
How CBS Can Help with Your Saudi Business Setup
Navigating the company formation in Saudi Arabia may seem complex, but you don’t have to do it alone.
We at CBS (Corporate Business Services) specialize in helping foreign investors start a business in Saudi Arabia seamlessly. From our experience assisting numerous companies expanding to Saudi.
Our consultants stay up-to-date with Saudi regulations and reforms. As the laws evolve, we adapt quickly so our clients always comply with the current rules.
Forget juggling multiple agencies – we handle the entire process for you. This includes preparing and attesting documents, applying for the MISA license, registering your company with authorities, and even arranging your national address and office lease. Our goal is to give you a turnkey solution so you can focus on your business strategy while we handle the bureaucracy.
Ready to expand into Saudi Arabia? With CBS by your side, the process can be efficient and stress-free. Contact us today for a consultation, and let’s turn your Saudi business vision into a reality.
