Guide to Setting Up a Business Saudi Arabia for Foreigners

With the government’s ambitious Vision 2030 and the New Investment Law effective in 2025, many foreign investors are now establishing their business in Saudi Arabia. Companies can now be 100% foreign-owned across a wide range of sectors such as technology, tourism, renewable energy, health care, and real estate. 

This guide will help you understand how to start a business in Saudi Arabia. We will cover the legal framework, particularly the New Investment Law and what it entails.  We will also outline the types of entities available for foreigners, what are the requirements for company registration, and post-incorporation compliance you need to know about. 

Understanding Saudi Arabia’s Business Landscape

Saudi Arabia’s Vision 2030 is a sweeping reform and economic diversification framework launched in 2016 by Crown Prince Mohammed bin Salman. It aims to reduce the kingdom’s dependence on oil revenue, modernize its economy, and transform Saudi society by 2030.​

To support this initiative, Saudi Arabia passed the New Investment Law effective from February 7, 2025. This removes many licensing requirements, replacing them with a simplified registration process through a “single window” mechanism. This platform is managed by  the Ministry of Investment of Saudi Arabia (MISA). 

Industries Open to 100% Foreign Ownership

The new Saudi Investment Law, allows you to invest in any sector open for investment. This includes those previously restricted under the negative list, subject to specific approvals. Here are some examples of sectors that are now open for foreign investment:

• Technology & Digital Sectors
• Industrial & Manufacturing
• Mining & Agriculture
• Transport & Logistics
• Healthcare & Pharmaceuticals
• Real Estate & Construction
• Tourism, Entertainment & Sports
• Education, Media & Services

Restricted or Prohibited Sectors for Foreign Investment

While Saudi Arabia has opened new regulations in line with Vision 2030, there are still sectors that remain prohibited or restricted in the country. These industries are part of the “negative list” maintained by the Saudi government, limiting or prohibiting foreign investment participation. 

Here are sectors that remain restricted or prohibited in the Kingdom: 

• Oil exploration, drilling, and production (with some exceptions for mining-related services)
• Manufacturing of military equipment, devices, and uniforms
• Manufacturing of civilian explosives
• Certain security and defense-related services
• Real estate brokerage and some real estate activities in sensitive areas (e.g., Makkah and Madinah)
• Printing, publishing, and certain media activities such as broadcasting and audiovisual media
• Telecommunication services
• Commercial agencies and distributorships
• Tourism-related services linked to Hajj guidance
• Catering to military sectors
• Fisheries

Foreign Ownership Regulations in Saudi Arabia

To operate a foreign-owned company in Saudi Arabia, you need to obtain a MISA License. Upon approval, the license enables company incorporation, followed by registration with the Ministry of Commerce and other authorities for full operation.

You are also required to comply with Saudization or Nitaqat which is a workforce nationalization policy mandating hiring specific quotas of Saudi nationals based on industry, company size, and classification tier (Platinum, High Green, etc.). For example, foreign companies with five or fewer employees must have at least one Saudi, and those with over 100 employees must meet a Saudization rate of roughly 30%. 

Saudi Arabia enforces UBO (Ultimate Beneficial Ownership) rules requiring all companies (except publicly listed ones) to disclose their ultimate beneficial owners to the Ministry of Commerce. UBOs are individuals owning or controlling at least 25% of shares or voting rights, or those exercising significant influence over company management. The rules aim to enhance transparency, combat money laundering and tax evasion, and align Saudi regulations with international standards. 

Types of Entities Available for Foreigners

Effective December 30, 2022, the Companies Law governs business structures and corporate governance in Saudi Arabia. Under this framework, here are legal entities you can establish in the country:

• Limited Liability Company (LLC): This is the most common and flexible entity type for foreign investors. It allows for 100% foreign ownership in most sectors (except some restricted ones) and limits shareholder liability to capital contribution. LLCs may be managed by a general manager or a board of directors, with optional requirements depending on company size. A minimum capital requirement usually applies, such as SAR 500,000 for 100% foreign-owned LLCs.​
• Joint Stock Company (JSC): Suitable for larger projects, JSCs allow shareholders to own publicly traded shares. They have more stringent governance, including mandatory boards and annual general meetings. JSCs support capital raising from public markets under regulated frameworks introduced in the law.​
• Simplified Joint Stock Company (SJSC): A newer form introduced to provide more flexible and lighter regulatory requirements than full JSCs, targeting startups and SMEs that want to attract investors while easing compliance burdens.​
• Branch of a Foreign Company: Foreign companies can register branches to operate locally without separate incorporation but must comply with local licensing and registration. Branches do not form a separate legal entity and expose the parent company to liabilities.​
• Representative Office: For non-commercial activities like marketing or research only. Cannot generate revenue or sign contracts locally.​

How to Register your Company in Saudi Arabia

You can legally register your business in Saudi Arabia by obtaining a MISA license, reserving a trade name, and  applying for Commercial Registration. The entire process typically takes 1-3 months depending on sector, entity type, and efficiency in document submission. 

How to Obtain a MISA License

A MISA license serves as the official authorization for foreign investment across multiple sectors in Saudi Arabia. The MISA license simplifies the entry process for foreign businesses by consolidating multiple older permits into a single, streamlined license that defines the allowed business activities and grants legal rights to operate within the Kingdom.​ 

Here’s what you need to apply: 

• Certificate of incorporation from the foreign parent company
• Articles of Association (AoA)
• Audited financial statements for the most recent fiscal year
• Board resolution authorizing the establishment of the Saudi entity
• Passport copies of shareholders and directors
• Legalized and translated documents in Arabic are mandatory

To complete your application, you must also specify the business activities you intend to pursue that are eligible under Saudi Investment Laws. Upon successful review, MISA issues the Foreign Investment License, enabling the applicant to proceed with registering the company officially with the Ministry of Commerce and obtain the Commercial Registration (CR).

How to Reserve a Trade Name for your Company in Saudi Arabia

Reserving a trade name in Saudi Arabia is an essential early step in company registration. The trade name serves as your company’s official identity for all legal, commercial, and branding purposes and must comply with Saudi regulations. 

To reserve a trade name for your company, it must meet the following criteria: 

1. The name must be unique, not identical or confusingly similar to existing registered names.
2. It must be in Arabic or have an official Arabic translation.
3. Certain restricted words (government-related, misleading terms, or offensive content) are prohibited.
4. The name should reflect the business activity and be appropriate for the entity type.​

You can suggest up to five alternative names to increase the chances of approval. Your application is processed within 10 business days, extendable up to 30 days if inter-agency approval is required. 

A reservation fee of SAR 200 applies for Arabic names, SAR 500 for English names, plus VAT and publication fees if applicable. The reserved name cannot be used or transferred until officially registered.​

Commercial Registration (CR) in Saudi Arabia

A CR in Saudi Arabia is the official legal authorization that allows a business to operate within the Kingdom. It is mandatory for all companies to register commercially to conduct trade, enter contracts, open bank accounts, and participate in government tenders.

As of April 3, 2025, Saudi Arabia implemented a new Commercial Registration Law establishing a unified national registration system.  Instead of periodic renewals, the new system mandates annual confirmation of registration information to ensure compliance, replacing the traditional expiration model. 

To apply for a Commercial Registration, here’s what you need:

1. MISA License
2. Commercial registration documents (including Articles of Association) 
3. Registered national address
4. Contact details of the General Manager (including IDs, national address, and mobile / email). 

Once you have a CR, you must register with the local Chamber of Commerce (CoC) to support commercial activities, networking, and compliance. It issues membership certificates used for government contracts, bidding on tenders, import-export activities, and official attestations like certificates of origin. 

Post-incorporation Requirements in Saudi Arabia

Register for Taxes and VAT (If Applicable)

To meet fiscal obligations as a foreign-owned business entity in Saudi Arabia, you must register for taxes and VAT under Zakat, Tax and Customs Authority (ZATCA). All companies, (including foreign-owned entities) must register within 60 days of commencing business operations to legally pay taxes, file returns, and avoid penalties.​

As a foreign company, you are required to pay the following corporate taxes: 

• Corporate Income Tax: Applies to foreign-owned companies at a rate of 20% on net profits.
• Zakat: A religious levy primarily by Saudi and GCC nationals calculated at 2.5% of the Zakat base.
• Value-Added Tax (VAT): A 15% consumption tax on goods and services for businesses exceeding the turnover threshold.
• Withholding Tax: Levied on payments to non-residents for royalties, dividends, and services, at varying rates.

To register for taxes, you must apply for a Tax Identification Number (TIN) through the ZATCA online portal (ERAD platform). ZATCA typically reviews applications within 48-72 hours and issues a TIN and confirmation of tax classification. If your annual revenue exceeds SAR 375,000, you must also submit a VAT application. 

Opening a Business Bank Account

Opening a corporate bank account is a critical post-incorporation step to help manage capital deposits, business transactions, payroll, and tax payments. Although requirements can vary depending on the bank, here’s what you need to open a bank account in Saudi Arabia: 

• Commercial Registration (CR)
• MISA License
• Articles of Association (AOA)
• Tax Identification Number (TIN)
• Authorized Signatory Documents e.g. Iqama (residency permit) or passport copies of the person authorized to operate the account.
• Board Resolution
• Proof of Office Address: 
• KYC and AML Disclosures

Some banks may require an in-person visit for identity verification. You can assign a representative to submit documents. Due diligence and KYC checks typically take between 3 working days to 2 weeks.

Key Operational Registrations After Incorporation

To tie it all together, part of the post-incorporation process in Saudi Arabia is to register your business with various government agencies and platforms. These steps ensure smooth business operation in accordance with Saudi Law. 

Here are key operational compliance you need to have before you can legally operate your business in the Kingdom: 

1. Obtain a Company Seal: a physical or electronic stamp bearing your company name and Commercial Registration (CR) number. It is required to authenticate official documents such as contracts, shareholder resolutions, management decisions, government filings, invoices, and official letters. The seal typically costs around SAR 40-50 and must be made according to specific regulations to be legally valid.​
2. GOSI Registration:  Registration with the Ministry of Labor and General Organization for Social Insurance (GOSI) is mandatory to legally hire employees, comply with Saudization (Nitaqat) policies, and manage work permits and visas for expatriate workers. At the same time, registration also facilitates contribution to social insurance for foreign and local employees. 
3. Register a National Address: serves as the official correspondence address for legal notices, government communications, and notifications. This registration is mandatory for maintaining a valid Commercial Registration and accessing government services.​
4. Obtain a General Manager’s Visa and Complete Medical Checks: As the general manager or CEO, you must obtain a Saudi work visa and iqama (residence permit). Medical examinations as per Saudi public health standards are mandatory before residency permits are granted. 
5. Register with Government Portals for E-Services: in line with Saudi’s efforts to fast-track  corporate registration, you must register your company on key government digital portals and e-government services:
   • Muqeem: For expatriate immigration and residency permits.
   • Absher: For government-related e-services and identity management.
   • Qiwa: Workforce and labor contract management platform ensuring Saudization compliance.
   • Mudad: Payroll and wage protection system to ensure employees are paid on time.​

Incorporating a business in Saudi Arabia can be a complex and multi-step process. Navigating these requirements demands local expertise, time, and resources, which can be challenging for foreign investors. Thankfully, Emerhub specializes in helping you seamlessly establish a legal entity in Saudi Arabia. 

Our experienced team offers tailored support to accelerate your market entry while ensuring full regulatory compliance. By acting as your agent in the Kingdom, we can manage the entire incorporation process from start to finish. 

Tell us about your plans to expand in Saudi Arabia. Fill out the form below and have a free consultation with our local experts in the country!