Company Formation in Saudi Arabia

When planning a business setup in Saudi, foreign founders have three main entity types to choose from. 

Limited Liability Company (LLC)

The most common form of business entity for foreign companies is an LLC. It serves to separate your parent company from local liabilities. In most sectors, 100% of the shares are in hold by foreign owners.

Foreign Branch Office

Branch – A Branch acts as a direct arm of your parent company at the overseas location. It is not a legal entity in itself. Your head or parent company remains responsible for the debts of the foreign subsidiary in full.

Regional Headquarters (RHQ)

A RHQ license is available for global firms that relocate their primary Middle East base to Riyadh. This grants a 0% corporate tax break for 30-years and gives direct access to state contracts.

Stage 1: Obtaining MISA Investment License

1- MISA Investment License is the first major legal document you need to set up business in Saudi Arabia. You need it to sign office leases or open bank accounts.

Your parent company must provide these basic documents to begin a company registration in Saudi Arabia.

1. Company Certificate: If you are in a partnership (e.g. your business is run through an LLC or Ltd.) it will show that your “Main firm” has been running for 1 yr or longer.

• Financial Auditing: Displaying past year budgets to show that your coalition is sound.
• Board Resolution: Express your desire to expand in Saudi Arabia and name Your local Manager.
• Government License Fee: SAR 2,000 as initial fee to issue the license and SAR 10,000 for the first year as per MISA The total is SAR 12,000.

Upload Approved Papers → Choose Required Business Activities → Submit SAR 12000 → Get License Over Internet 

Phase 2 : Commercial Registration (CR) with MoC

Once MISA gives you the thumbs up on your license, then you go and apply for your Commercial Registration (CR) with the Ministry of Commerce.

Select Name ➔ Drafting of Rules (AoA) ➔ Sign Online → Obtain CR Number

• Choose a Name: Book your business name on the MoC site.
• Write the Company Rules: Create your Articles of Association (AoA) to state owners, shares and manager powers.
• Chamber of Commerce: Join the local Chamber of Commerce by paying your annual dues.
• Commercial Office Lease: Rent a commercial office and register the address from the Ejar web system.

Phase 3 — Establishing Government Accounts

CR number will help you to open state files. These portals should be activated for every business setup in Saudi.

CR -> Open Tax File (ZATCA) -> Labour File (Qiwa) -> Social Insurance (GOSI) -> Visas (Muqeem) 

• ZATCA (Taxes) : Register with the tax office during 30 days and obtain a 15 digit tax number for both VAT and Corporate Tax.
• Qiwa (Labor) : Establish local work contracts with tracking of worker rules.
• Social Insurance (GOSI): register the employees to ensure insurance and retirement benefits at the workplace.
• Muqeem (Visas): Request of worker residency cards (Iqamas) and travel permits.

Phase 4 : Opening up a Company Financial institution Account

A corporate bank account is the last task you must complete to receive payments and trade. Lendings to local banks are governed by the strong guidelines of Saudi Central Bank (SAMA).

Your GM number needs to get an Iqama (residency card) and then register on Absher before going to the bank in person.

Operations: Get Work Visa ➔ Medical check ➔ Iqama got ➔ Visit Bank ➔ Deposit bank notes 

Law usually dosnʹt require service LLCs to have a minimum capital appropriation. But injecting a minimum of SAR 100,000 into your new account makes it easier for the banks to accept your file much faster.