All About Company Registration in Saudi Arabia

Saudi Arabia, the largest economy in the Middle East and North Africa (MENA) region, offers significant economic opportunities. Its strategic location opens to export markets in Asia, Africa, and Europe. Additionally, a young and affluent population drives domestic consumption, leading to a growing demand for company formation in Saudi Arabia.

This article explains all about company registration in Saudi Arabia and legal considerations to be checked while forming a company.

Company Registration Process

Saudi Arabia (SA) is trying to streamline its company registration process, reducing the timeline to establish a business to six to nine months. Here are the key steps involved:

Pre-incorporation Process

1. Business Name: Choose a desired name for the company.
2. Business Entity: Decide on the type of business structure, such as Limited Liability Company (LLC), Limited Partnership Company (LLP), Single Member Limited Liability Company (SMLLC), Joint Stock Company (JSC), Branch Office, etc.
3. Organizing Documents: Prepare necessary documents like business licenses, certificates of incorporation, board resolutions, and power of attorney.

Incorporation Process

1. Investment License Application: Foreign investors must apply for an investment license from the Saudi Arabian General Investment Authority (SAGIA). This application includes details about the investment activity and financial information.
2. Articles of Association (AOA): Submit these to the Ministry of Commerce and Investment for approval and notarize them for Commercial Registration certification and Tax Number.
3. Company Name Registration: Reserve and get approval for the company name with the Unified Centre before submitting incorporation forms, AOA, and the deed of establishment.
4. SAGIA Foreign Business Investment License: Upon submitting all required documents, including the Commercial Registration (CR), Tax Registration, Municipality License, and Bank's Share Capital deposit letter, SAGIA issues the foreign business investment license.
5. MERAS Registration: Use the MERAS program to facilitate business procedures and registration with a municipality. Physical office registration is mandatory, and the complete registration is submitted to the Saudi Arabia Ministry of Commerce and Industry (MOCI).
6. Company Seal: Create a company seal required for various legal documents.
7. Chamber of Commerce Registration: Obtain a membership certificate from the Chamber of Commerce and Industries (CCI) within 30 days of CR registration.
8. Bank Account Opening: Open a local bank account within 90 days from the date of receiving the Commercial Certificate.

Post-incorporation Process

1. Obtain Saudi employment visas
2. Convert the bank account to a corporate account

Legal Considerations for Company Registration

Below are the legal considerations to be noted while forming a company.

Tax Structure 

Saudi Arabia imposes no personal income tax on employees. Companies are subject to corporate tax, with a rate of 20% for non-listed companies. Additionally, withholding taxes apply to various payments to foreigners.

Activities Prohibited for Foreign Investors

The government prohibited foreign investors from participating in certain activities, such as 

• Defence manufacturing
• Security services
• Real estate brokerage
• Drilling for oil and gas
• Fishery business
• Real estate investment in Medinah and Makkah
• Printing and publication businesses

Minimum Paid-Up Capital

While there is no statutory minimum capital requirement, SAGIA often requires foreign LLCs to have a minimum capital of SAR 500,000. Specific activities may have varying capital requirements, ranging from SAR 30 million for 100% foreign commercial ventures to SAR 500,000 for service transport businesses.

Accounting and Taxation

Personal income tax does not apply to individuals, but companies are subject to corporate tax based on their shareholding structures. Additionally, Zakat, a religious wealth tax, is levied at 2.5% on the company's Zakat base. Withholding tax rates vary for different types of payments to non-residents.