Foreign Company Branch Set Up in Saudi Arabia

A branch office is one of the easiest ways to establish a legal entity in Saudi Arabia. Unlike a Limited Liability Company (LLC), a branch office is an extension of your existing parent company. It is easier to set up and liquidate as needed, and provide 100% foreign ownership. 

However, a branch office must match the parent company’s global business scope. The new Investment Law in Saudi Arabia has also broadened the scope of Branch Offices, but with heavy restrictions. 

So, when is a branch office beneficial to a foreign company? What are the requirements to establish one? In this article, we will tackle how to incorporate a branch office in Saudi Arabia. 

What is a Branch Office?

A Branch Office is a legal extension of a foreign parent company. It is not a separate legal entity and acts as an extension in Saudi Arabia. The parent company remains fully liable for the branch’s actions, debts, and contracts within the Kingdom.

Branches can engage in service-oriented or project-based work. This includes engineering, construction, IT services, consulting, logistics, training, or executing specific government contracts. Temporary licenses allow you to focus on one project without third-party dealings.

Benefits of Starting a Branch Office in KSA

If you are evaluating whether to set up a branch or an LLC, here are specific advantages for Branch Office set up in KSA:

• 100% Foreign Ownership: Historically, many sectors in KSA required a local partner. With the launch of Vision 2030, foreign Branches now allow 100% foreign ownership. You retain full control over your operations, strategy, and profits without needing a Saudi national as a shareholder.
• Simplified Governance: A branch office does not require a Board of Directors or a formal Articles of Association in the same way a Saudi LLC does. Instead, it is managed by a General Manager (GM) appointed through a Power of Attorney (PoA) or a Board Resolution from the parent company. 
• Direct Use of Parent Company Credentials: When bidding for large-scale projects, especially with entities like NEOM, PIF, or Aramco, your “track record” is your most valuable asset. In a branch structure, the Saudi entity is the parent company. This makes it easier to demonstrate technical capability and financial stability during the pre-qualification phase of a tender.

Although an LLC is the most common structure for foreigners, a branch office is often preferred for companies who want to avoid complex governance structures and enter the market quickly. It’s also ideal for government contractors and service providers (e.g. engineering, consulting, and IT firms) who want to leverage their parent company’s established track record directly. 

Limitations of a Branch Office in KSA

Despite its benefits, a Branch Office does have its limitations. This structure cannot engage in trading, commercial sales, marketing, promotion, retail, or investments. This preserves the branch’s non-autonomous status under Saudi law, preventing market distortion in commercial retail sectors reserved primarily for local or fully localized entities.

• Not a separate legal entity: This means the parent bears unlimited liability for all obligations, debts, and legal issues.
• Requires a minimum paid-up capital: requires SAR 500,000 guaranteed by the parent, and deposited locally.
• Profit repatriation restriction: ​transfers need ZATCA tax clearance, audited statements, board resolutions, and AML checks, delaying outflows by weeks. 
• Subject to Saudization compliance: Although a branch office is not a separate entity from the parent company, it is still subject to mandatory quotas for hiring a minimum percentage of Saudi nationals. Non-compliance can block visa renewals, government contracts and fines. 

Limited business scope: Activities strictly confined to those specified in the MISA license and parent’s constitutional documents. You are not allowed to conduct independent trading, retail sales, or new ventures outside of your parent company’s scope. A branch office also cannot engage in broad promotion/marketing or activities needing local ownership.

For instance, a parent company based in Germany establishes a branch office as an Architectural Design Firm in Saudi Arabia. When applying for a MISA license, the company can only apply for a “Service License” to provide architectural design and consulting with the correct ISIC (International Standard Industrial Classification) code. This means the Branch Office cannot participate in Physical Construction (contracting) for a possible project in Riyadh. 

Branch offices are allowed to add more codes provided they still follow the parent company’s business activities. Otherwise, a separate LLC is required.

Can a branch office conduct commercial trade (buying and selling goods)?

Under the 2026 Saudi Investment Law and updated Commercial Registration (CR) rules, you can engage in commercial trade but with critical strings attached. To be permitted in this sector, you must have the following: 

1. Matching the Parent Company’s Scope: You can only buy and sell the exact types of products or services that the parent company is licensed for in its home country. You must provide a certified proof (Articles of Association/CR) from your home country showing that “trading” or “wholesale/retail” is part of your existing core business.
2. Higher Minimum Paid-up Capital: To be 100% foreign-owned, you are required to inject SAR 30 million (approx. $8 million). 
3. Cannot act as a “middle man”: Under the Anti-Concealment Law, a branch must be a substantive business. It cannot act as a middleman or an agent for other companies. If you are selling goods, you must generally be the importer of record or the manufacturer, rather than just a “broker” connecting a Saudi buyer to a foreign seller without taking ownership of the goods.
4. Must be declared as a “trading branch”: To legally buy and sell physical goods, you must specifically apply for a Trading License (now part of the Investment Registration Certificate). If you have a service license, you are allowed to “sell” your expertise and “buy” what you need to operate. However, you cannot buy equipment in bulk and resell them. 

To know more about how you can engage in commercial activities as a branch office, you can talk to our local experts in Saudi Arabia. 

Core Requirements of Starting a Branch Office in KSA

Setting up a Branch Office in Saudi Arabia requires meticulous documentation. The Kingdom has joined the Hague Apostille Convention, which has simplified the process, but the requirements remain rigorous. Emerhub can help you gather all the necessary documents to get you started. 

The Parent Company Documents

You will need to provide the following documents from your home country, all of which must be Apostilled (or attested by the Saudi Embassy if your country is not a member of the Hague Convention):

1. Certificate of Incorporation / Trade License: Evidence that the parent company is legally active.
2. Articles of Association / Bylaws: To verify the company’s scope and management structure.
3. Board Resolution: A formal document stating the company’s intent to open a branch in KSA and appointing the General Manager.
4. Power of Attorney (PoA): Issued to a representative (often a law firm or consultant) to handle the incorporation and to the General Manager to run the office.
5. Financial Statements: Usually, the last audited financial year is required to prove the parent company’s solvency.

Local Requirements

Establishing a physical presence is a mandatory prerequisite for finalizing your legal status in the Kingdom. Unlike other jurisdictions where a virtual office may suffice, Saudi authorities require a verifiable, physical commercial location. This location serves as the anchor for your government relations, visa allocations, and tax inspections.

• Physical Office Space: You cannot use a “virtual office” for a MISA license. You must have a commercial lease agreement (Ejar) in Saudi Arabia.
• National Address: A formal registration of your office location via the Saudi Post.

How to Set Up a Branch Office in Saudi Arabia

Under the Saudi Investment Law (updated for 2026), incorporating a branch office is now almost entirely digital. The timeline is around 2-4 weeks or longer, depending on the complexity of your business. 

Step 1: Obtain the MISA Investment License

MISA serves as the primary gateway for all international capital entering Saudi Arabia. The agency evaluates the suitability of your parent company and ensures your proposed activities align with the Kingdom’s economic objectives. You must secure a MISA License tailored to your ISIC code, which dictates the legal boundaries of your local operations.

A MISA Investment License serves as the foundational legal document that validates your right to operate as a foreign entity. It is required in every subsequent government service or registration you need in Saudi Arabia. 

Step 2: Commercial Registration (CR) Issuance

This step formalizes your status as a registered business participant within the Saudi market and enters your entity into the national business registry. A critical part of this step is selecting your trade name. 

For a branch office, the name must strictly mirror the parent company’s name and include a descriptive suffix of the activity, typically following the format: 

“$Parent Company Name$ for Consulting/Engineering/Services – Foreign Branch.” 

It is essential to ensure that the chosen name does not conflict with existing trademarks in the Kingdom. If rejected, you need to file a formal name-reservation appeal. Emerhub can help you verify if your trade name has any conflicts with existing companies in Saudi Arabia.

Step 3: Chamber of Commerce Membership

After receiving the CR, you must register with the local Chamber of Commerce (e.g., Riyadh Chamber or Jeddah Chamber). This membership is mandatory for authenticating company signatures and official documents throughout the business lifecycle. 

In practice, you will frequently require “Chamber Attestation” for critical operational tasks, such as validating employment offer letters for visas, certifying commercial contracts, and authorizing bank-related correspondence. This step ensures that your branch’s paperwork is legally recognized by other Saudi government departments and private-sector partners.

Step 4: General Manager (GM) Appointment

Unlike an LLC, a Branch Office requires a General Manager instead of a Board of Directors. Choosing the right individual is crucial since the legal system grants GMs broad powers that may carry significant liability for the parent company. 

Here are the general qualifications of a GM for a Branch Office in KSA:

• Residency Status: A GM must be a resident of Saudi Arabia. If the GM is an expatriate, they must obtain an Iqama (residency permit). This requires the branch to have a valid office lease and a cleared “block visa” under the specific “General Manager” profession code.
• Authorized Signatory Status: The GM must be formally registered in the Commercial Registration as the authorized signatory. This enables them to access the Ministry of Justice’s e-services, represent the company in court, and interact with the Zakat, Tax and Customs Authority (ZATCA).
• Legal and Banking Authority: The GM holds the primary authority to open and manage corporate bank accounts, process payroll via Mudad, and sign high-value commercial and lease contracts. They also possess the power to delegate specific administrative duties to local Government Relations Officers (Muqeebs) or legal counsel.
• Educational Prerequisites: For certain specialized ISIC activities (such as engineering or legal consulting), the GM may be required to provide attested educational degrees that match the professional requirements of the Saudi Council of Engineers or other local professional bodies.

Step 5: Registering with Labor and Social Insurance (GOSI)

You must open a file with the Ministry of Human Resources and Social Development (MHRSD) and the General Organization for Social Insurance (GOSI). This allows you to hire employees and ensures you are compliant with the “Saudization” (Nitaqat) requirements.

Saudi Arabia uses a color-coded system to track the percentage of Saudi nationals in your workforce. As a new branch, you will likely start in a “small-A” category, but as you grow, you must meet specific quotas to maintain your ability to issue new work visas. Failure to comply can lead to your “block” on the labor portal, meaning you cannot hire or renew permits.

Step 6: ZATCA Tax Registration

Within 60 days of receiving your CR, you need to register your foreign branch office with ZATCA for tax registration. Through the ERAD online portal, you must obtain a Tax Identification Number (TIN). Once the registration is finalized, your branch is classified as a permanent establishment, and you will be subject to:

• Corporate Income Tax: 20% on net profits (for the foreign share).
• Value Added Tax (VAT): If your taxable supplies exceed SAR 375,000 annually.
• Withholding Tax: On payments made to non-resident entities (e.g., royalties, management fees).

Step 7: Opening a Corporate Bank Account

Saudi banks have stringent “Know Your Customer” (KYC) requirements for foreign-owned entities. Some banks require an exhaustive review of Ultimate Beneficial Owners (UBOs) and the legalized global corporate structure of the parent organization. Compliance committees often scrutinize every layer of ownership to ensure total transparency before authorizing local operations.

To open a corporate bank account in KSA, you generally would need your R, MISA license, Chamber of Commerce certificate, and the GM’s Iqama/ID. Some banks may require the GM to be physically present.

Set Up a Branch Office in Saudi Arabia with Emerhub

Navigating the complexities of Saudi Arabian corporate law requires a partner who understands the local landscape. Emerhub acts as your dedicated representative, streamlining your entire incorporation journey.

Our experts simplify the initial stages of the Branch Office setup, coordinating directly with relevant authorities, from MISA to ZATCA, to ensure full compliance. We can also facilitate corporate bank account openings, managing the rigorous documentation and ownership verifications required by local financial institutions.

Expand your business in Saudi Arabia with a Branch Office. Talk to our local experts by filling out the form below!