FAQs
Yes, if your client is the Saudi Government or part of the public sector. The same is true in most cases for doing business in the private sector. Conducting business in Kingdom and taking revenue offshore runs the risk of Permanent Establishment (PE) and associated penalties.
It depends on what your business does. Licences include Services, Industrial, Scientific and Technical Office, Real estate, Commercial, Transport and so on. We can help you gather the appropriate documents and work through the criteria, so that the Ministry of Investment is best placed to successfully approve your application.
No, it’s a very different process. From experience, we’ve seen the challenges that cost time and money when people make false assumptions about setting up a business in Saudi. Always seek local Saudi advice.
Fixed costs are split between Government fees and Agency fees. A 100% foreign owned business can cost in the region of SAR 130,000 fixed costs before annual recurring costs commence. A partnership or JV will likely cost more due to legal fees.
Not always, but Professional licences are almost always exclusively restricted to having a partner. Some may be precluded to foreign business as they are 100% Saudized. A trading licence also requires a partner if you want to reduce the capital deposit needed to establish the business. Most service licences however do not require a partner and your business can be 100% foreign owned.
Most 100% foreign owned business are recommended to have an LLC. A branch is also possible. JVs and partnerships need detailed constitutional agreements drafted with legal assistance.
On average, from submission of licence application to subsequent portal registrations and bank account set up, it should take 3 months.
It depends on the type of Licence and Commercial Registration. Sometimes a large figure is needed, for example with a Trading Licence. In other circumstances, there is no minimum capital deposit required with many Service Licences. Local advice is advised.
As part of your incorporation in Saudi you should expect your business to have an office that is registered and compliant with the local municipality. Only with this in place, can you present your full credentials to a client – who’ll be expecting this, as standard.
If you want to do business with the Saudi Government and you meet the criteria of the number of registered entities outside of the Kingdom, then yes. If you fall below the threshold of registered businesses and you conduct business in the private sector only, then a Regional Headquarters is not required. Other waivers include the price on your bid for a government contract.
There are incentives for establishing a business in one of the 5 Special Economic Zones in Saudi, including Tax, but they are not free zones. The best plan is to engage with the Ministry of Investment (we can help you with this), to understand what the existing and emerging policy is and determine if it’s a suitable option for your business.
Saudisation is the government policy that supports Saudis entering the workplace. There are two forms. The first is the percentage of Saudis that you must employ in your business, and that’s based upon the business you’ll be doing in the Kingdom. The second is the specific profession, which may be exclusive to Saudis such as HR professionals. The HRSD Program is monitored through the Nitiqat portal and your business will be audited monthly in accordance with your payroll.
There are fundamentally three main types of tax to consider in the Kingdom of Saudi Arabia – Corporate Income Tax, Value Added Tax and Withholding Tax. Tax advice should be taken from a local accredited Tax specialist as part of your strategy planning for market entry. We can help you with this.
As you’d expect, compliance covers VAT filing, Capital deposits and Saudisation; National Insurance contributions, HR contracts, Business Licences – and more. Most compliance matters are conducted through an ecosystem of Saudi Government e-portals, all of which require usernames, passwords and One Time Passwords. Local Back Office advice is recommended to avoid penalties or black listing (even by accident), and we can help you work through those criteria.
All businesses can employ expat nationals through their respective visa block allocation from Government, which directly relates to Saudisation compliance. The statutory Labour and Residency Visa is called an Iqama and requires a detailed application with associated costs. The Iqama will be Wage Protection System and National Insurance compliant. No other visas allow your business to employ an individual and take a salary in Kingdom.
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