Saudi Company Formation
Opening a company in Saudi Arabia
Why open a company in Saudi Arabia? What are the advantages of Saudi Arabia?
Saudi Arabia, or its official name "The Kingdom of Saudi Arabia" (KSA), is a very powerful country in the Middle East and the world in general. Since oil reserves were discovered there in 1938, Saudi Arabia has become the world's second largest oil producer and leading oil exporter, and it holds the world's second largest oil reserves and the sixth largest gas reserves. Saudi Arabia is defined as a high-income economy by the World Bank, and is the only Arab country that is a member of the G20 group. Its economy is the largest in the Middle East and the seventeenth in the world by GDP per capita.
The local currency is the Saudi Riyal (SAR), which is almost equivalent to the Emirati Dirham, and is worth about 89 cents.
Saudi Arabia is a large national market that understands the English language excellently.
Saudi Arabia is a perfect place for investment and business expansion. The Saudi government is keen to boost the economy by providing incentives to foreign investors. Investors see Saudi Arabia as one of the most attractive investment destinations. Tourists are fascinated by Saudi hospitality and friendliness, Saudi cultural heritage and the country's natural wealth.
-After opening the company, you can get a permanent visa.
-After opening the company, you can open a bank account for the company in Saudi Arabia, as well as a private bank account.
-If the company's business is over, the company can be dissolved at any time
-International business can be done through the company in Saudi Arabia
-The company can engage in several industries or activities
-The company can hold real estate assets
-It is easy to do business with the company in Saudi Arabia
-A company in Saudi Arabia has government support
-Saudi Arabia has a strong network of international and local commercial banks
Minimum requirements for opening a company in Saudi Arabia
The minimum requirements for opening a company in Saudi Arabia vary according to the company's business.
In Saudi Arabia, a company has two main businesses:
1. A service company
2. A trading company
Saudi trading company
In Saudi Arabia, a company that engages in trading can engage in any type of trade, such as import/export, marketing of products, and production within the country or outside the country.
The requirements for a Saudi trading company are first of all regarding ownership: The shareholder of a company Saudi must be a foreign company. In other words, an individual foreign resident (person) cannot own a Saudi company, but only a foreign corporation such as a limited liability company.
Also, it is not enough that the shareholder is a foreign company, but it must be a group of at least 3 foreign companies. All 3 companies can be in the same country, or in different countries.
The fact that there are 3 companies is not enough, but they must also be active businesses: they must all have at least one year of audited financial statements, to show that they are active businesses and not just shell companies that were set up only technically to open the company in Saudi Arabia.
If the investor does not meet these requirements, the Saudis will not open the company.
An exception to the requirement for 3 companies is if the owner of the Saudi company is a corporation (company) established in one of the GCC countries: Bahrain, Kuwait, Oman, Qatar, Saudi Arabia itself, or in the United Arab Emirates: Dubai, Abu Dhabi, etc.
Equity of a Saudi Trading Company
A trading company must have equity of 30 million Saudi riyals, i.e. around $8 million, but this is only a commitment of the shareholder and not an amount that must actually be deposited.
How does this manifest itself? The foreign shareholder owner essentially has a "limited guarantee" for the debts of the Saudi company, in the amount of $8 million. Beyond this amount, the shareholder is not a guarantor for the company's debts.
Saudi Service Company
In Saudi Arabia, the requirements for a company that provides services are more limited.
The foreign shareholder of the Saudi company must also be a corporation, not an individual, but 3 companies in a group are not required, only one company is sufficient. However, as before, this foreign company must be an active business, with audited financial statements for at least one year.
For example, an Israeli software development company that has been in existence for 3 years can open a subsidiary in Saudi Arabia that will sell services to local residents.
Equity of a Saudi company for providing services
A service company does not have a minimum equity, and it can be set to 0.
No need for a local shareholder or local director
In Saudi Arabia, there is no need to have a local partner. That is, there is no need for a local shareholder to hold shares as a condition for opening the company.
This means that the company can be opened with 100% shareholding in the name of an Israeli citizen – in your name, or even in the name of an Israeli company. The director can be Israeli and there is no need for a local director.
No foreign citizenship required
In Saudi Arabia, you also don't need any European citizenship to open a company. You can open a Saudi company even if you are an Israeli citizen.
The process of opening a company in Saudi Arabia
Opening a company in Saudi Arabia begins with the signing of a notarized power of attorney to open a company by a local agent. The document is then sent urgently by courier to Saudi Arabia for processing with a local Saudi notary. After several processes in Saudi Arabia, the client is required to sign the application for registration in the commercial registry, and again send the document to Saudi Arabia. At this stage, the company already exists legally and can begin business activity.
Residence Visa
After opening the company, it is required to issue a residence visa.
Bank account in Saudi Arabia
After receiving the visa, you can independently approach a bank in Saudi Arabia and open an account for the new Saudi company.
Physical offices
As part of our repertoire of services, we can offer a connection with various local offices for the purpose of renting an office or hotdesk.
Company Maintenance
The company requires annual maintenance of fees, annual filings, a local address (which we will provide for you), and filings with the tax authority.
It is necessary to be prepared for the fact that maintaining a company in Saudi Arabia is expensive compared to well-known Western countries. On the other hand, the maintenance costs are not particularly expensive than maintaining a company in Dubai.
Tax in Saudi Arabia
Corporate tax in Saudi Arabia is only 20%.
For sales to the local Saudi market, VAT is 5% (as in Dubai).
There is also a "Zakat" tax, which is essentially a mandatory contribution to Islam, at a rate of 2.5% of the company's net worth (and not profits!). Think of "Zakat" as a property tax, which is required to be paid on the value of the property held.
Questions and Answers
Question: Is it necessary to physically fly to Saudi Arabia to open a company in Saudi Arabia?
Answer: The entire process of opening a company can be carried out remotely using power of attorney, and at no stage is it necessary to physically come to Saudi Arabia. There is no need to fly to Saudi Arabia to open the company. The entire process of opening a company is carried out remotely without setting foot on Saudi soil.
However, in order to obtain the residence visa, and then to open the company's bank account, it is required to fly.
Question: Who provides the local address for the company in the new Saudi Arabia?
Answer: We will provide the local address.
Question: How can I find a good accountant who can To handle our new Saudi company?
Answer: We will connect you with a local accountant.
Question: If I want to come to Saudi Arabia to open a bank account, what should I do?
Answer: We will try to arrange a meeting for you at the branch in advance to sign the account opening forms, so that everything is in order before you arrive, so that you don't have to wander around the city in search of a branch that will accept you and open a bank account for your new Saudi company.
Question: What type of company in Saudi Arabia should I open?
Answer: There is only one type of company in Saudi Arabia, so there is really no reason to hesitate. This type is the regular and familiar Limited Liability Company. In Saudi Arabia, the company is called LLC, as in most countries.
Question: Can I use an Israeli passport to open a company in Saudi Arabia?
Answer: Can I use an Israeli passport to open a company in Saudi Arabia. We can open a company in Saudi Arabia for any Israeli citizen as long as they have a valid passport.
Question: How long does it take to open a company in Saudi Arabia?
Answer: The process of opening a company, including signing the power of attorney and sending it, is expected to take about 3 months, from the beginning of the process to the end, including the banks' readiness to accept the new company as a client. Of course, these times depend on third parties, so this is only an estimate.
Question: Is it possible to define that any foreign company will be the subsidiary of a company in Saudi Arabia?
Answer: Yes, absolutely, in fact, a foreign company is one of the requirements for opening a company in Saudi Arabia, and a foreign company is just what is needed . We know how to do such a process with the Saudi Registrar of Companies without any problems and in a completely smooth manner.
Question: How much does it cost to open a company in Saudi Arabia?
Answer: Click here to contact us and get an up-to-date quote for free!
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