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April 17, 2021
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How Foreign Investors Can Start A Business Venture In Saudi Arabia?

KSA or the Kingdom of Saudi Arabia has become popular among worldwide foreign investors looking to expand beyond the national market. It has the largest economy in middle-east and the government is offering appealing initiatives to help the country become more business-friendly. SMBs are also encouraged to prosper in the business network.

Reasons to invest in KSA

  • An ideal destination for investment & trading
  • Growing economy
  • Strategic location
  • Business-friendly network
  • Politically stable

Business set-up in foreign turf is risky because of non-awareness about the procedures, laws, and regulations to follow in the specific country. Therefore, before you take steps to set up a business in the KSA, hire a legal representative to help you with the necessary formalities. ERLF has the best team of corporate lawyers that offers cross-border businesses to start a company in Saudi Arabia. For emerging ventures, multiple business sectors are holding massive opportunities.

  • Tourism & hospitality
  • Manufacturing
  • Real estate
  • Industrial
  • SMBs
  • Technology
  • Banking & security
  • Entertainment & Media
  • Healthcare

Different company formation available in Saudi Arabia

  • SMLLC or Single Member Limited Liability Company has a sole owner, who holds all the company shares. Owing an SMLLC entity is advantageous, but the sole owner cannot establish another SMLLC.
  • JSC or Joint Stock Company involves capital divided into equal value shares owned by shareholders. They can buy, sell, or transfer their shares without any impact on the company’s existence.
  • LLC or Limited Liability Company is a popular business venture in KSA. In an LLC, the number of shareholders must not exceed over 50. Every shareholder signs the MOA and appoints 1 or 2 auditors.
  • Foreign Company Branch operates in the form of a branch or agency. It is an extension of an international business that represents and operates in KSA. Nevertheless, it needs to follow the local rules and regulations like using the Arabic language for business documents and paperwork.

Foreign investors are allowed to establish the above types of legal entities to conduct different business activities in the Saudi market. Every business type has its pros and cons. You can choose one based on your specific business needs.

Free zones in KSA

  • Jazan economic city
  • Prince Abdulaziz Bin Mousaed Economic City
  • King Abdullah Economic City

All the economic cities aim to diversify the country’s economy. Emerging ventures can benefit from the tax freedom on custom duties, low tax rates, global connectivity, and exposure to an international market.

Tax set-up in KSA

Zakat & Income Tax department is liable for implementing and regulating the tax laws in KSA. Taxation has two components –

  • Income tax applicable to foreigners
  • Zakat is a sacred tax pertinent to the KSA/GCC nationals

First, the business has to get registered in Saudi Arabia and then with DZIT for doing business legally in KSA. Personals that are eligible for paying income tax are given below.

  • Nonresident investors
  • The nonresident individual doing business in KSA
  • Personnel who do business in the oil & petroleum industry
  • Resident businesses with non-KSA shareholdings

For making your business setup journey more effortless hire a trusted lawyer in Saudi Arabia. ERLA is a corporate law firm that helps start-ups, entrepreneurs, and investors from across the globe to set their business efficiently. Contact the experts to kick start your new venture in KSA!

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