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Frequently Asked Questions

Do you have questions about Gofico, entrepreneurship or anything about doing business in the Saudi? Check our FAQ below to find the answers you need.

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Frequently Asked Questions

What are the common forms of business entities in Saudi Arabia?

Limited Liability Company (LLC).
Joint Stock Company (JSC).
Branch of a foreign company.
Technical and scientific service office.

What are the steps to establish a foreign entity in Saudi Arabia?

Steps to Establish a New Entity
‍Reserve a trade name for the new entity, either online or manually, with the Ministry of Commerce.
‍Choose activities from the ISIC4 classification that align with the desired business activity.
‍Submit an application to the Ministry of Investment for an investment license for foreigners.
‍Confirm the following details with the client: Paid-upcapital.
‍Management (number of managers and their authorities).
‍Authority to establish branches of the company.
‍Company’s duration.
‍Main headquarters.
‍Commercial registration duration (1–5 years).
‍Investment license duration (1–5 years).
‍Draft and submit the Articles of Association for review and approval by the Ministry of Commerce.
‍Once approved, notarize the Articles of Association in front of a notary public.
‍Issue the commercial registration for the new entity.
‍Obtain operational licenses from relevant government entities if needed.

What are the steps to establish a Saudi/GCC entity in Saudi Arabia?

Reserve a trade name for the new entity through the Ministry of Commerce (MOC) online portal.
Choose activities from the ISIC4 classification that align with the desired business activity.
Confirm the following details with the client: Paid-up capital. Management (number of managers and their authorities). Authority to establish branches of the company.
Company’s duration. Main headquarters. Commercial registration duration (1–5 years).
Set up the electronic platform and submit the Articles of Association (AOA) for review and approval by the MOC. Once approved, notarize the AOA in front of a notary public or electronically via the shareholders’ Absher accounts. Pay the invoice issued by the MOC. Issue the commercial registration for the new entity.

What activities can foreign investors engage in?

Foreign investors can engage in all activities listed under the ISIC4 classification, provided these activities are not included in the list of activities prohibited for foreign investors.

What are the minimum capital requirements?

LLCs: No statutory minimum capital under the Companies Law. For foreign investors: A capital of no less than SAR 100,000 is recommended. For Saudi/GCC investors: A capital of no less than SAR 10,000 is recommended.
‍JSCs: Minimum capital required is SAR 500,000 under the Companies Law.

What documents are required from Saudi/GCC shareholders or individuals wishing to establish an entity in Saudi Arabia?

A copy of the Articles of Association of the shareholders.
A copy of the Commercial Registration of the shareholders.
A copy of the national ID if the shareholder is an individual.
A copy of the ID of the manager(s) or board members.
The national address.
A notarized Power of Attorney.

What documents are required from foreign investors wishing to establishan entity in Saudi Arabia?

A notarized and translated Power of Attorney certified by the Saudi embassy or consulate.
A resolution from shareholders or the board of directors to invest in Saudi Arabia, translated and certified by the Saudi embassy or consulate.
A copy of the shareholders’ Articles of Association, certified by the Saudi embassy or consulate.
A copy of the shareholders’ Commercial Registration, translated and certified by the Saudi embassy or consulate. Audited financial statements of the foreign company for the last fiscal year, certified by the Saudi embassy or consulate. Copies of passports for the general manager or board members of the Saudi entity.

What are the requirements for reserving a name for a newentity?

The proposed name must be in Arabic. The proposed name must have an appropriate meaning in Arabic. The proposed name must not be identical to an existing or reserved trade name.
The proposed name should reflect the company’s activities (e.g., Al Noor Contracting Company or Al Noor Information Technology Company).

What are the prohibited activities for foreign investors?

Oil exploration, drilling, and production (except for mining-related services CPC 5115 and 883).
Services related to military sectors.
Security and investigative services.
Real estate investment in Makkah and Madinah.
Tourist guidance services related to Hajj and Umrah. Employment and labor services, including local recruitment offices. Real estate brokerage. Commission agents (CPC 621).
Nursing, physiotherapy, and para-medical services (CPC 93191).
Fisheries. Blood banks, poison centers, and quarantine centers.

Frequently Asked Questions

What is the required management structure for a new entity?

LLCs: Managed by either: A single manager. Two managers. A management board.
‍JSCs: Managed by a board of directors comprising:
Minimum: 3 members. Maximum: 11 members.

What are the common license types available for foreign investors,their requirements, and restrictions?

1.Service License:
Activities include construction, management investment, IT, tourism, healthcare, food services, financial services, etc.
Restrictions: Construction: The company cannot provide consultancy services. Healthcare: The entity must be a company. Facilities must be accredited by a recognized healthcare organization. A minimum of 3 years of experience in the country of origin. Exemption:Premium Residency holders are exempt from documentation requirements.
2.Industrial License:
Activities include heavy and light industries, manufacturing.
Restrictions: Premium Residency holders are exempt from documentation requirements. Must coordinate with the Ministry of Commerce and Industry for industrial licensing.
3. Commercial License:
Activities include wholesale and retail trading.
Restrictions: With a Saudi partner: Minimum Saudi partner share: 25%. Minimum total capital: SAR 26,666,667. Minimum foreign capital contribution: SAR 20,000,000. 100% Foreign Ownership: Minimum capital: SAR 30,000,000. Must meet employment localization targets and regional/global presence criteria.
4.Entrepreneurial License: Activities include experimental projects approved by Saudi universities orincubators.
Restrictions: Support letter from the supervising entity. No objection letter from a Saudi sponsor for foreign residents.
5. Consultancy License (Engineering Offices):
Activities include engineering consultancy services.
Restrictions: The company must be licensed in 4 countries. A minimum of 10 years of experience.

What are the types of licenses for Saudi/GCC investors, their requirements, and restrictions?

1. Service License:
Activities: Consulting, engineering, healthcare, tourism, IT, etc.
Restrictions: Adherence to activity-specific regulations. 2.Industrial License:
Activities: Manufacturing, heavy and light industries.
Restrictions:Coordination with the Ministry of Industry is required for approvals

Commercial License:Activities: Retail and wholesale trading.
‍Restrictions:Minimum capital: SAR 500,000.
Compliance with localization (Saudization) regulations.
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‍Real Estate Development License:Activities: Construction of residential and commercial properties.Restrictions:
‍Real estate investment in Makkah and Madinah is prohibited.
Required approval from the Ministry of Municipal and Rural Affairs.

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What are the procedures for registering a branch of a foreign company?

Prepare the required documents: Power of Attorney. Shareholders’ resolution.
Articles of Association. Commercial registration of the parent company.
Financial statements for the last fiscal year.
Manager’s passport copy.
All documents must be notarized, translated, and certified by the Saudi embassy. Apply for an investment license from the Ministry of Investment.
Register the branch with the Ministry of Commerce. Complete the setup of a national address and secure operational licenses if required.

What are the tax obligations for Saudi/GCC investors?

Zakat: Levied at 2.5% of the company’s zakat base.
VAT: Standard rate is 15% on taxable goods and services. Withholding Tax: Applied on payments made to non-residents for services performed in Saudi Arabia.

What are the tax obligations for foreign investors?

Zakat: Levied at 2.5% of the Saudi/GCC shareholder’s zakat base. Corporate Income Tax: Levied at 20% on foreign shareholders’ net profits. VAT: Standard rate is 15% on taxable goods and services. Withholding Tax: Applied on payments made to non-residents for services performed in Saudi Arabia.

What is the Saudization (localization) requirement for businesses?

Companies must hire Saudi nationals to meet minimum quotas based on the Nitaqat program classification for the company’s size and industry. Example:
Platinum companies: No additional Saudization requirements.
Green companies: Must maintain specific ratios of Saudi employees to remain compliant.
Red companies: Face penalties and cannot issue or renew work permits.

What is the Nitaqat program?

The Nitaqat program isa Saudization initiative designed to increase the employment of Saudi nationals in the private sector. Companies are categorized into bands (Platinum, Green,Yellow, and Red) based on their compliance with Saudization requirements.

What are the penalties for non-compliance with Saudization?

Fines for not meeting Saudization quotas. Inability to renew or issue work permits for expatriate employees. Suspension of government services, such as visas and company registrations.

Frequently Asked Questions

What is the process for obtaining an investment license?

LLCs: Managed by either: A single manager. Two managers. A management board.
‍JSCs: Managed by a board of directors comprising:
Minimum: 3 members. Maximum: 11 members.

What is the process for renewing a commercial registration?

Log in to the Ministry of Commerce portal.
Submit the renewal application and confirm the registration duration (1–5 years).
Pay the renewal fee through the SADAD payment system. Download the renewed commercial registration.

What are the labor law obligations for employers?

Employment contracts must be in writing and specify the terms of employment. Employers must pay wages on time and through a bank account. Provide employees with health insurance. Adhere to Saudi labor laws regarding working hours, overtime pay, and rest periods. Register employees with the General Organization for Social Insurance (GOSI).

What are the work visa requirements for expatriates?

Valid passport with a minimum validity of 6 months. Signed employment contract.
Medical examination report from an authorized clinic. Approval from the Ministry of Human Resources and Social Development (HRSD).
Visa issuance through the Ministry of Foreign Affairs.

What are the steps to obtain a municipal license for a business?

Submit an application to the local municipality.
Provide the commercial registration of the company. Submit the national address. Provide a lease agreement for the premises.
Pay the required fees and obtain the license.

What are the steps for obtaining an industrial license?

Apply through the Ministry of Industry and Mineral Resources (via the portal). Submit the required documents:
Feasibility study for the project. Environmental impact report.
Commercial registration. Technical details of the project (e.g., machinery, raw materials).
Wait for the ministry to review and conduct inspections. Pay the required fees to receive the industrial license.

What is the procedure for obtaining a real estate development license?

Register with the Ministry of Municipal, Rural Affairs, and Housing. Submit the required documents, including: Proof of company registration. Financial solvency certificate. Construction plans. Secure approvals for the project (environmental, zoning, etc.). Obtain the license after fees are paid.

What is the procedure for obtaining a professional services license?

Apply through the Ministry of Investment portal.
Submit the required documents, including: Proof of qualifications and experience.
Business plan. Commercial registration (if applicable).
Wait for the ministry to review and issue the license.

What is the procedure for registering trademarks in Saudi Arabia?

Submit an application through the Saudi Authority for Intellectual Property (SAIP) portal. Provide the required documents:
    Trademark image or      logo.
     Commercial
     registration.
     Power of attorney (if      applying on behalf of       someone).
Pay the trademark registration fees.
Wait for the authority to review and approve the application.

Frequently Asked Questions

What is the process for obtaining an investment license?

Register online through the Ministry of Investment (formerly SAGIA) portal.
Submit the required documents: Business plan. Financial statements (for foreign investors). Articles of association.
Pay the application fee.
Receive approval and obtain the license

What are the export regulations in Saudi Arabia?

Obtain an export license from the Saudi Export Development Authority (SEDA) for certain products.
Follow the regulations set by the Saudi Standards, Metrology, and Quality Organization (SASO).
Provide all required shipping and customs clearance documents.
Comply with GCC and Saudi-specific export restrictions (e.g., on hazardous or restricted goods).

What are the import regulations in SaudiArabia?

Importers must be registered with the Ministry of Commerce.
Obtain a valid commercial registration for the importing business. Ensure imported goods meet SASO standards and have a Certificate of Conformity.
Submit customs clearance documentation (invoice, packing list, bill of lading, etc.).
Pay customs duties as applicable.

What are the legal requirements for contracts in Saudi Arabia?

Contracts must be written in Arabic (a translated version is acceptable but the Arabic version prevails). Include all essential elements: offer, acceptance, consideration, and lawful purpose. Contracts must comply with Shariah principles (e.g., prohibition of interest/usury). Have contracts notarized if required for enforcement.

What are the penalties for non-compliance with VAT regulations?

What are the key features of the GCC customs union?

A unified customs tariff applied across GCC countries.
Free movement of goods between GCC countries without additional customs duties. Coordination of customs procedures and regulations.
Revenue-sharing mechanism for collected duties.

What are the requirements for opening a bank account for a business?

Provide the company’s commercial registration. Submit the investment license (for foreign investors). Provide identification documents for company shareholders and authorized signatories. Submit the company’s articles of association. Provide proof of the company’s national address.

What are the insurance requirements for businesses?

Health insurance is mandatory for all employees.
Third-party liability insurance is required for certain industries. Commercial property insurance is recommended (optional but advisable). Employers must comply with insurance regulations set by the Cooperative Health Insurance Council (CCHI).

What are the steps for liquidating a business in Saudi Arabia?

Notify the Ministry of Commerce and submit a liquidation request. Publish a liquidation announcement in an official newspaper. Settle all outstanding debts and employee wages.
Cancel all government licenses and deregister the company with authorities (e.g., GOSI, Zakat, Tax, and Customs Authority). Distribute remaining assets among shareholders.
Submitfinal documentation to close the commercial registration