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Top 5 myths on doing business in the Kingdom of Saudi Arabia


A business district in Saudi Arabia at sunset

Clients tell us one, strong 'AEI difference' is our approach to transparency. We don't hide the details when it comes to creating a strategy that will help you enter the Saudi market. From costs to timelines, compliance issues or potential risks, we'll always give you the bigger picture. This way, you can develop an informed plan that has the best possible chance of success.


To that end, there are five common misconceptions we hear on doing business in the Kingdom of Saudi Arabia:

 

1. "It only takes 15 minutes to register a business in Saudi." 

It's true, there may be some parts of the Licensing process or a new Commercial Registration that take 15 minutes, but there are a whole host of tasks that also need completing. In the initial stages of bringing your business to the Kingdom, that may take six to eight weeks, or more, depending on complexity. Then there are other mandatory requirements such as registering for Tax, Labour, and National Insurance, as well as opening bank accounts and obtaining a licensed office. This can also take the same amount of time - as you would expect, for a compliant approach to setting up a business.

 

2. "It only costs SAR 650 for an Iqama."

Yes, it costs SAR 650 to print the Iqama. But if it is a new Iqama, then you may also need to pay for the Visa in the country of origin, medical checks, criminal background checks, education attestations, Iqama issuance, and Labour license as well as dependents' levies where appropriate. Costs are different again if the request is a transfer of an Iqama from one employer to another in the Kingdom. This is an area we advise on all the time, so do reach out to us. We can offer a complete analysis of the costs involved.

 

3. "We don't need a Regional Headquarters (RHQ) to do business in Saudi."

The situation changes. This condition depends on several factors - most importantly the number of registered entities within the GCC region. There are plenty of incentives for this policy, including the Premium Residency for RHQ members, but entering the KSA market is not entirely dependent upon setting up an RHQ that's a separate registered entity and treated as a cost centre.


Read our insight article on Regional Headquarters Guidance in Saudi Arabia for 2024.

 

4. "Capital Deposits are not fixed to a SAR figure."

Capital deposits are fixed for some licenses, such as Trading Licenses, but most Service Licenses don't have a minimum deposit. A business will, however, have to make its capital deposit as declared in Company Articles within three months of achieving Commercial Registration.

 

5. "There is no such thing as a dormant entity in Saudi."

When a business has been registered with the authorities, liabilities and responsibilities begin. This includes tax filing and license renewals. Unless an entity is officially liquidated, then fines and penalties will accrue for as long as the entity fails to make the appropriate payments to carry operating or conclude. Compliance is complex, and regular monitoring of e-portals is an essential task for any back office.


 

Do you need help with your business in the Kingdom?

At AEI Saudi we offer tactical, practical advice like this to all of our clients. Contact us if you'd like to know more. We're very happy to talk through any of the topics touched on in this Insight, and all aspects of market entry and compliance in the Kingdom.

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