Business Setup In Saudi Arabia (KSA)

Starting a business in Saudi Arabia in 2025 offers many opportunities, but understanding the costs involved is important for planning ahead. The overall cost depends on your business type, industry, and location. The good news is that Saudi Arabia is streamlining processes and offering incentives to make it easier and more attractive for foreign investors.

Company Registration and Licensing

If you’re setting up a Limited Liability Company (LLC), the registration fees with the Ministry of Commerce and Investment typically range between SAR 10,000 to SAR 20,000 (around USD 2,700 to USD 5,300). Depending on the nature of your business, additional licenses can cost anywhere from SAR 5,000 to SAR 30,000 (about USD 1,300 to USD 8,000).

Office and Property Costs

Renting office or commercial space varies based on the city and size of the space. In major areas like Riyadh or Jeddah, you can expect to pay between SAR 150 to SAR 500 per square meter per year (roughly USD 40 to USD 133).

Capital Requirements

• For a single-shareholder LLC, the minimum capital is SAR 300,000 (about USD 80,000).
• For multi-shareholder LLCs, it’s typically SAR 500,000 (around USD 133,000).
• Some industries have higher capital requirements set by SAGIA (Saudi Arabian General Investment Authority).

Professional Services

• Legal, consultancy, and company formation services can range from SAR 20,000 to SAR 50,000 (approximately USD 5,300 to USD 13,300).
• Ongoing accounting and auditing services may cost between SAR 10,000 to SAR 30,000 (about USD 2,700 to USD 8,000) annually.

Visas and Immigration

For foreign employees, work visas and residency permits are typically SAR 5,000 to SAR 10,000 (around USD 1,300 to USD 2,700) per employee.

Government Incentives

To encourage growth and foreign investment, Saudi Arabia offers various incentives, such as reduced fees, tax exemptions, and subsidies, especially for businesses in priority sectors. These incentives can help lower overall setup costs and boost long-term profitability.

At Incorpyfy, we simplify the business setup process in Saudi Arabia by guiding you through every detail so you can focus on growing your business while we handle the logistics.

Understanding corporate tax in Saudi Arabia doesn’t have to feel overwhelming. Here’s a simple breakdown to help you navigate the basics:

• Standard Corporate Tax – If your company is fully owned by Saudi nationals or GCC citizens, you’ll pay a flat 20% tax.
• Mixed Ownership – For companies with non-GCC partners, the 20% tax applies only to the non-Saudi or non-GCC portion. The Saudi or GCC partner’s share is tax-free.
• Natural Gas Investments – If your business is involved in natural gas activities, the tax rate jumps to 30%.
• Oil and Hydrocarbon Production – Companies in this sector face a higher tax rate of 85%.

The good news? Saudi Arabia has double taxation agreements with many countries, which can help reduce the tax burden for foreign businesses. Plus, if you’re operating in economic cities or industrial zones, you might qualify for tax breaks or exemptions like reduced rates or tax holidays.

At Incorpyfy, we’re here to make sense of it all, helping you understand how taxes apply to your business while exploring ways to benefit from incentives.

The primary ministries responsible for setting up a business in Saudi Arabia are:

1. Ministry of Commerce and Investment (MCI): This ministry registers and licenses companies and oversees various aspects of commercial activities in the Kingdom.
2. Ministry of Human Resources and Social Development (MHRSD): This ministry handles matters related to labor laws, work permits, and visa requirements for foreign employees.
3. Ministry of Municipal and Rural Affairs and Housing: This ministry issues permits and approvals for various construction and development projects and regulates real estate activities.
4. Saudi Arabian General Investment Authority (SAGIA): This government authority is responsible for promoting and facilitating foreign investment in Saudi Arabia and providing support and incentives to foreign investors.

Depending on the specific industry or sector, additional ministries or regulatory bodies, such as the Ministry of Industry and Mineral Resources, the Saudi Food and Drug Authority, or the Capital Market Authority, may be involved in the business setup process.

In Saudi Arabia, businesses can engage in multiple activities under one company, but there are certain rules and conditions to keep in mind. The Ministry of Commerce and Investment (MCI) allows companies to combine activities as long as they align and fit within the company’s approved objectives.

That said, some industries come with extra steps. For example, if your business touches on healthcare, finance, or energy, you’ll likely need additional licenses or approvals from the relevant authorities.

When setting up your company, it’s important to clearly list all planned activities in your Articles of Association or commercial registration. If you decide to expand into new areas later, you’ll need to update your commercial registration and get approval from the MCI.

To avoid any hiccups, it’s a good idea to consult with legal or business setup experts. They can guide you on the feasibility of combining activities and ensure you meet all regulatory requirements from the start.

Foreign investors looking to start a business in Saudi Arabia have several options for structuring their company, each with its own benefits and considerations. Here’s a breakdown of the most common business structures available:

Limited Liability Company (LLC):

• Provides limited liability protection for shareholders.
• Requires at least two shareholders.
• Foreign ownership can range from 0% to 100%, depending on the industry.

Branch Office:

• Acts as an extension of a parent company based outside Saudi Arabia.
• Operates as part of the parent company without forming a separate legal entity.
• Requires a local Saudi service agent or sponsor.

Professional Company:

• Ideal for businesses offering professional services like consulting, engineering, or legal services.
• Foreign ownership can reach up to 100%, depending on the sector.

Joint-Stock Company:

• Designed for larger businesses with multiple shareholders.
• Requires a minimum capital of SAR 5 million.
• Foreign ownership can vary from 0% to 100%, depending on the sector.

Joint Venture:

• Formed through a partnership between a foreign investor and a local Saudi partner.
• Ownership and responsibilities are shared based on the terms of the agreement.

It’s important to remember that certain industries may have specific rules around foreign ownership and business structures. The best choice for your company will depend on factors like your industry, available capital, and long-term goals. Consulting with business setup experts can help ensure you choose the right structure for your needs.

Yes, if you’re planning to open a branch office in Saudi Arabia as a foreign company, having a local sponsor or service agent is typically required. The sponsor acts as your legal representative and plays a key role in helping your business operate smoothly within the Kingdom.

What Does a Local Sponsor Do?

• Secures Licenses and Permits – They assist in obtaining the necessary approvals from Saudi government authorities.
• Acts as a Liaison – The sponsor bridges the gap between your company and government agencies, ensuring smooth communication.
• Provides Operational Support – From administrative tasks to logistics, they help keep your branch running efficiently.
• Ensures Legal Compliance – The sponsor helps your branch adhere to local laws and regulations, reducing the risk of issues.

The need for a local sponsor aligns with Saudi Arabia’s focus on encouraging partnerships between foreign and local businesses. This ensures foreign companies have the right local support and presence to thrive in the market.

It’s important to note that the sponsor’s role is mostly administrative and facilitative – they don’t hold ownership or control over your branch’s operations. This requirement generally applies to branch offices, but Limited Liability Companies (LLCs) or joint-stock companies often allow full or partial foreign ownership, depending on the sector.

Choosing the right sponsor is crucial. Their reputation, experience, and connections can significantly influence how smoothly your branch operates in Saudi Arabia. Taking the time to select the right partner can make a world of difference in how effectively your business grows and succeeds in the Kingdom.

Setting up a branch office in Saudi Arabia involves meeting several important requirements, and while the process may seem complex, it’s manageable with the right guidance. Here’s a breakdown of what’s needed to get started:

Key Requirements for Opening a Branch Office

• Local Sponsor or Service Agent – A Saudi sponsor or agent is required to legally represent your branch and help with permits, approvals, and operational needs.
• Parent Company Documents – You’ll need certified copies of essential documents like the Certificate of Incorporation, Articles of Association, and details about your company’s structure.
• Board Resolution – The parent company must issue a formal resolution authorizing the branch office setup and appointing a manager or representative to oversee operations in Saudi Arabia.
• Business Plan and Financial Records – A detailed business plan explaining your branch’s objectives, activities, and financial forecasts is required. Additionally, your company’s audited financial statements from recent years must be submitted.
• Commercial Registration – The branch must be officially registered with the Ministry of Commerce and Investment (MCI) by providing the necessary documents and meeting the outlined conditions.
• Office Space – Proof of office space, such as a lease agreement, is needed to confirm the physical location of your branch in Saudi Arabia.
• Capital Requirements – Depending on the industry and business activities, there may be minimum capital requirements or financial guarantees to meet.
• Industry-Specific Approvals – If your business operates in sectors like healthcare, mining, or finance, additional licenses or approvals may be required from authorities like the Ministry of Industry and Mineral Resources or the Saudi Food and Drug Authority.

The requirements can vary depending on your industry, but having the right documents and approvals in place ensures your branch operates legally and efficiently. Partnering with experienced legal and business consultants can help navigate the process and avoid unnecessary delays.

Opening a branch office in Saudi Arabia is a great way to tap into the Kingdom’s growing market, and with careful planning, the process can be straightforward and rewarding.

Setting up a branch office in Saudi Arabia requires careful preparation and specific documentation to meet local regulations. Here’s an overview of the key documents you’ll need to get started:

Key Documents for Branch Setup

Parent Company Documents

• Certified copy of the Certificate of Incorporation or Registration.
• Certified copy of the Articles of Association or Memorandum of Association.
• Corporate structure or shareholding details.
• Board resolution authorizing the establishment of a branch in Saudi Arabia.

Company Profile and Business Plan

• A detailed company profile highlighting the parent company’s history, activities, and global operations.
• A comprehensive business plan for the branch, including its objectives, activities, and market strategy.
• Projected financial statements and feasibility studies.

Financial Documents

• Audited financial statements of the parent company for the past few years.
• Bank references and proof of financial capability.

Representative or Branch Manager Information

• Passport copy of the branch manager or representative.
• Resume or curriculum vitae (CV).
• Proof of educational qualifications and professional experience.

Local Sponsor or Service Agent Agreement

• A formal agreement with the appointed local Saudi sponsor or service agent is required for branch operations.

Office Space Documentation

• Lease agreement or proof of secured office space for the branch.

Capital Deposit Proof

• Evidence of capital deposit or financial guarantee, if applicable based on the business activities.

Activity-Specific Documents

• Additional documents or licenses required for specific industries or business activities, such as healthcare, finance, or manufacturing.

Many of these documents may need to be authenticated, legalized, or translated into Arabic to comply with Saudi requirements. Depending on the industry and business activities, additional paperwork may also be necessary.

Why Professional Guidance Matters

Navigating the document preparation and regulatory requirements can be complex. Working with experienced legal and business consultants ensures that everything is accurate, complete, and compliant, saving you time and avoiding delays.

Setting up a branch in Saudi Arabia offers exciting opportunities, and with the right preparation, the process can be seamless and rewarding.

Yes, foreign capital investment is still required to set up a trading business branch in Saudi Arabia in 2025. The Saudi Arabian General Investment Authority (SAGIA) enforces minimum capital requirements for foreign companies looking to open a branch for trading activities in the Kingdom.

For 2024, the minimum capital required to establish a trading branch is SAR 2.5 million (around USD 667,000). This is an increase from the previous SAR 2 million, reflecting Saudi Arabia’s efforts to attract more foreign direct investment (FDI) and boost economic diversification.

The capital must directly support branch operations, such as:

• Leasing or purchasing office space.
• Hiring staff.
• Procuring inventory.
• Covering operational costs tied to the trading business.

It’s worth noting that the exact capital requirement may vary based on the type of trading activities and the goods involved. Some sectors may have higher capital requirements, especially industries considered strategically important or requiring greater investment.

Capital investments can be made by:

• Depositing cash into a Saudi bank account.
• Transferring assets like machinery, equipment, or inventory into the Kingdom.

Foreign companies need to provide proof of the capital investment as part of their branch registration process with SAGIA. This ensures compliance with regulations and helps establish a solid foundation for business operations in Saudi Arabia.

The minimum capital required to set up a Limited Liability Company (LLC) in Saudi Arabia can vary depending on the type of business and industry. For most sectors, there is no specific minimum capital requirement for LLCs, allowing flexibility for small and medium-sized businesses to establish themselves without significant upfront investment.

However, for certain industries – such as trading, contracting, or sectors with higher financial risks – the Saudi Arabian General Investment Authority (SAGIA) may set capital requirements. For example, a trading LLC typically requires a minimum capital of SAR 500,000 to SAR 1 million or more, depending on the nature of the business.

It’s important to check with the relevant authorities or consult a business setup expert to get accurate details based on your specific industry and business activity. This ensures you meet all necessary regulations while planning for growth in the Saudi market.