Starting a business in Saudi Arabia?

January 5th, 2020

Saudi Arabia has taken new measures to promote the private sector in recent years. Through their economic diversification agenda, Saudi Arabia is looking to grow its private sector contribution in the economy.

A few key considerations before starting a business in Saudi Arabia:

• The kingdom has made significant changes to its business environment. Speak to local companies, lawyers and foreign firms with operations in Saudi Arabia, research the characteristics of different Saudi industries, have a clear idea of the markets you are targeting and make sure you know what actions are required to comply with commercial regulations.

• Incorporate your company through SAGIA (Saudi Arabian General Investment Authority). This is the government entity that provides investment licences for foreign-owned companies to operate. It also issues entrepreneur licences to start-ups, both of which you can apply for online. Businesses will also need a commercial registration and certain activities will need further certification from the Chamber of Commerce. For this, you will need a registered address. Once these licensing hurdles are crossed, companies can set up a bank account and allocate sponsor shareholders.

• Once you have incorporated your business, you must find a physical office space. This is not only necessary to start functioning, it is required to register your address, which is in turn required to obtain a municipality licence and complete your company’s registration.

• Once the above step is complete, you must register with the Ministry of Labour and GOSI (the General Organization for Social Insurance). Once the address is registered, the national postal service registration (Wasel Commercial Service) is automatically activated.

• There are a few hiring policies to be made aware off, companies must be cognisant of the kingdom’s Saudization policy, which aims to lower the unemployment rate among Saudi nationals to 7 per cent, from 12 per cent. Nitaqat is a sub-segment of the programme and divides companies into certain ‘zones’ dictating the ratio of Saudi nationals to foreign expatriates permitted in the workforce. This information can be found on the Labour Ministry’s website.

If you have further questions or clarification on the business setup process in Saudi Arabia, contact us.


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