Business Setup in Riyadh: A Guide for Residents and Foreigners
The Kingdom of Saudi Arabia (KSA) has undergone significant transformation over the years, emerging as one of the leading investment hubs in the region. Thanks to its strategic reforms and initiatives rolled out over the past few decades, mainly driven by the Vision 2030 goals announced in 2016, with more to come.
KSA has also significantly improved its rankings in the World Bank’s most recent ease of doing business index, jumping up by 30 places. This continuous growth and attractiveness are making Saudi Arabia, particularly its capital, Riyadh, an ideal destination for setting up a business.
Featuring a welcoming business environment and wide market access, setting up a business in a strategic location as Riyadh, or Saudi Arabia, will open many doors of opportunities in the Middle East and beyond.
This blog will provide a complete guide on how foreigners and residents can set up a business in Riyadh, Saudi Arabia.
What Makes Business Setup in Riyadh Attractive?
Saudi Arabia has quickly established a strong position as a global attraction for foreign investors following the Saudi government’s significant initiatives and regulatory reforms aimed at fostering businesses in the country, particularly in its capital, Riyadh.
Overall, Saudi Arabia has been focusing on attracting the private sector and introducing a new investment law, appealing to residents and foreigners to set up their businesses in the capital.
Saudi Arabia Economic Snapshot
$29,920 – GDP Per Capita
15.36 Million – Saudi Labour Force
36.95 Million – Total Population
$389 Billion – FDI Inward Stock
Ideal Sectors for Business Setup in Riyadh
Chemicals
Energy
Industrial and Manufacturing
Healthcare and Life Sciences
Transport and Logistics
Tourism and Quality of Life
Real Estate
Human Capital Innovation
Information and Communication Technology
Financial Services
Mining and Metals
Pharma and Biotech
Agriculture and Food Processing
Aerospace and Defense
Sectors Restricted for Foreign Investment
Oil exploration, drilling, and production
Goods and services catering to the military sectors
Private security and investigative services
Real estate investment in Makkah and Medina
Guidance services and tourist orientation related to the Hajj
Recruitment services
Hunting and fishing of marine resources
How to Start A Business in Riyadh, Saudi Arabia: Step-by-Step Process
Understand the Legal Framework for Foreign Investors
Foreigners or residents who want to set up a business in Riyadh should consider the specialised legal framework governing investments. MISA, the Arabic term for the Ministry of Investment of Saudi Arabia, which is the legal entity responsible for overseeing foreign business setups and company formation.
A foreigner or expat who wants to start a business can retain 100% ownership of the business provided that they comply with the conditions established by MISA.
Here are some key factors to consider and keep note of in this step:
Foreigners are required to apply for an investment license from MISA.
The business must be in a sector that is open to foreign investment.
Comply with Saudi Arabian General Investment Authority regulations.
Select the Appropriate Business Structure
One of the most important steps in understanding how to start a business in Saudi Arabia as a foreigner is narrowing down the business structure. KSA has a variety of business structures, which include:
Limited Liability Company
Limited Liability One-person Company
Joint Stock Company
Foreign Company Branch
Solidarity Professional Company
Many foreigners who consider company formation in Riyadh or Saudi Arabia in general consider a limited liability company because an LLC can also be set up in other countries.
Obtain an Investment License from MISA
Business setup in Saudi Arabia requires an investment license from the MISA. This license provides legal validation for foreigners to establish and operate in Saudi Arabia. The processing time for the license takes 30 days, assuming the documents are submitted accurately.
Documents that are necessary to obtain an investment license from MISA:
Application form
Business plan
Testimony of solvency
Certificate of company registration from the home country
Copies of the passports of shareholders
Reference letter from the bank
Choose a Business Location
Foreigners and residents contemplating setting up a business in Riyadh or Saudi Arabia in general should pay close attention to the location. The city with the largest foreign direct investments is Riyadh, followed by Jeddah and Dammam.
Cities such as Jubail and Yanbu, which are more focused on industrial sectors, attract a higher number of manufacturing companies to Saudi Arabia.
Make sure your choice of location reflects on accessibility to the target market, availability of infrastructure, and ease of access to suppliers and clients.
Register the Company with the Ministry of Commerce
Once you have received your investment license from MISA, you can move on to the next step of the business setup in Saudi Arabia. This requires you to register your company with the Ministry of Commerce
To register the company with the Ministry of Commerce, you will need:
Article of Association - Expresses the structure and the purpose of the company and,
Commercial Registration (CR) - A statement that identifies your company with the law of Saudi Arabia.
Open a Saudi Bank Account
Opening a business bank account is crucial to ensure that financial transactions are conducted in a legally sound manner. Foreigners setting up a business in Saudi Arabia should visit the bank and provide all the relevant documentation, which includes the Investment license issued by MISA, the commercial registration certificate, and shareholders' identification documents.
Apply for Visas and Work Permits
As a foreigner who wants to set up a business in Saudi Arabia, you will most likely have to bring employees from abroad or sponsor a visa.
Work permits and visas are managed by the Ministry of Human Resources and Social Development in Saudi Arabia. Types of visas you can consider include an investor visa and a work visa.
Investor visas apply to overseas businessmen and investors. Whereas, work visas are applicable for the employees whom you are engaging for work in your business
Register for Taxes and VAT
Business setups in Saudi Arabia are subject to corporate tax and value-added tax (VAT). If a business is registered with a worth above a specific limit, obtaining a VAT registration from the Zakat, Tax, and Customs Authority is crucial.
Obtain Additional Licenses and Permits
Depending on the type of company formation setup in Riyadh or Saudi Arabia as a whole, a license or a form of permit will be required. This varies across different industries. For example, business setup in Saudi Arabia in sectors such as construction, healthcare, and education requires approval from many ministries.
10. Hire and Manage Employees with Saudisation Compliance
Also known as “Nitaqat,” Saudisation is a law that requires a percentage of Saudi nationals to be employed in a company. Besides this, any business setup in Riyadh or Saudi Arabia as a whole should carefully adhere to labour laws, including employee benefits, working hours, and other safety and environmental conditions.
11. Utilize MISA’s Support Services
MISA offers various support services to foreign investors seeking the best ways to establish a business in Saudi Arabia. The support services include investment advisory services, working with the local network, and support in official bureaucracy.
Documents Required for Company Formation in Saudi Arabia
Completed investment licence application form
Notarised board resolution listing partners’ names and their respective capital shares
Audited financial statements for the last three years
Certified Articles of Association
Passport copies of all shareholders
Proof of identity and address for directors and shareholders
Official approval from the Ministry of Saudi Arabia to commence business activities
Attested copy of the Power of Attorney