Set Up A Company in Saudi Arabia

Do you intend to set up a company in Saudi Arabia? Here are some tips to guide you through the related formalities.

Foreigners from all over the world were able to or are thinking about setting up a business in Saudi Arabia.

Saudi Arabia has managed to make itself an ideal investment destination for business and entrepreneurship and provides many benefits, such as the lowest average tariff rate in the Middle East and North Africa (MENA). In addition, local authorities reduced their port service charge by 50% in 2008 to further encourage entrepreneurship.

Please note that Saudi Arabia is listed as the best country in the MENA region by the World Bank. In fact, the country remains true to the liberal political traditions of private companies. In other words, foreign investment laws allow foreigners to have 100% ownership of their projects, even when it comes to real estate.

Finally, in terms of competitiveness, the fiscal environment of Saudi Arabia includes low taxes and numerous incentives. For many years, many foreign investors have enjoyed its financial freedom. In addition, the stability of the Saudi currency indexed to the US dollar does not impose any restriction on foreign currency repatriation or income for foreigners. So it is very important to understand the prerequisites and legal policies required to set up a company in Saudi Arabia

Types of companies in Saudi Arabia

As in most countries, setting up a business in Saudi Arabia requires different legal procedures. The following is some information about the different types of companies that exist in Saudi Arabia.

Sharikat Tawsiyah Bel-ashom (Ashom) is a limited company. This type of company requires a minimum of two and a maximum of fifty partners. Moreover, the liability of at least one partner will be unlimited. The responsibility of the other partners will be equal to the amount of their contribution to the capital. It should be noted that a minimum capital of one million rials is required, ie about 210,632 euros.

Sharikat Al-Mossahamah (SAM) is a joint-stock limited liability company that requires at least five partners and a minimum capital of 10 million riyals, which is about 2080 200 euros. The liability of the partners will depend on their size of the contribution to the capital.

Exclusive ownership is a sole partner company that does not require minimum capital, especially since the sole proprietor will have to guarantee his or her personal assets in the event of debt.

Sharikat Tadhamou is a joint venture company that requires at least two partners, both of which have an unlimited amount of commitment. A minimum capital of 500,000 riyals is required, ie about 105,000 euros (500,000 riyals).

Sharikat Zat Massouliyyah Mahdoodah (SMM) is a private limited liability company that requires at least five partners with a minimum capital of € 1,053,160. Each partner’s responsibility will be equal to their size of the contribution to the capital.

Economy of Saudi Arabia

The economy of Saudi Arabia is largely based on the government-owned oil exploitation. The oil market is about 75% of the country’s total budget, 45% of its gross domestic product (GDP), and 90% of its export revenues. As for the private sector, it accounts for 40% of the country’s GDP. Please note that there are approximately 6 million foreign workers in the services and oil fields to date.

The Saudi authorities have for many years strongly encouraged the private sector, especially in the fields of information and communication technology, natural gas exploration and petrochemicals, and the like. The country is seeking to further liberalize its trade policy as it is a member of the World Trade Organization (WTO). Therefore, trade and foreign investment must benefit from greater transparency and freedom.

The Saudi government is also trying to reform the development of the national economy to attract more foreign investment. In fact, foreign investors can now own up to 100% of their companies, in at least some sectors.

Finally, the authorities decided to privatize electricity and state-owned telecommunications companies in order to give more opportunities to foreign investors and encourage competition among them in the local market.