Exploring Business Expansion in Saudi Arabia (KSA): A Comprehensive Overview of 5 Vital Reasons

Contemplating your next business venture? Saudi Arabia beckons. Recent regulatory adjustments have streamlined the business setup process, while a tech-savvy, young population positions the kingdom as an ideal expansion hub. Saudi Arabia’s progressive outlook prioritizes innovation, evident through substantial investments in technology and infrastructure. Delve into our blog for indispensable tips on confidently expanding your business into Saudi Arabia.

Exploring New Horizons: Revealing Saudi Arabia’s Landscape of 100% Foreign Ownership

Keep up with shifting global business landscapes as Saudi Arabia leads innovative initiatives. A recent groundbreaking development opens unprecedented doors for foreign enterprises, granting them full ownership opportunities in the Kingdom. Since its inception, BMS Auditing has played a pivotal role in assisting numerous foreign businesses in establishing fully-owned branches in Saudi Arabia.

As a strategic step subsequent to the approval of foreign property ownership, Saudi Arabia now offers the opportunity to fully own companies within special economic zones. Before embarking on this promising venture, it’s imperative to take into account key considerations

Eligibility:

Attaining 100% ownership requires a well-established company with a minimum of one year of operational history in its home country, supported by a positive financial track record validated by an audited report from the preceding business year.

Activities:

While service-oriented businesses benefit from unrestricted foreign ownership, trading endeavors necessitate a significant capital investment of SAR 30,000,000. Professional services typically mandate a 25% Saudi ownership.

Restrictions:

Foreign investors are restricted from certain sectors, including defense equipment manufacturing, real estate in Medina and Mecca, and oil and gas exploration.

Efficient Establishment of Business in Saudi Arabia: Your Route to Success Within 3 Months

Setting up a business in a foreign country might seem daunting, but not in Saudi Arabia. With proper support, your business can be operational within just three months. The procedure encompasses three stages:

Initial Establishment (2-3 weeks): Acquire a MISA Investor License and register your legal entity with the Chamber of Commerce to lay the foundation. Personnel Setup (2-3 weeks): Obtain necessary permits to recruit staff through registration with the Ministry of Labor and acquiring requisite documentation. Residence and Finance (1-2 weeks): Finalize residency for your General Manager and initiate a local bank account for settling in.

Establishing Your Regional Headquarters (RHQ)

For those interested in pursuing government contracts in Saudi Arabia, establishing a Regional Headquarters (RHQ) is imperative. The Regional Headquarters Program, initiated by the Ministry of Investment Saudi Arabia and the Royal Commission for Riyadh City, aims to incentivize global companies to set up their regional headquarters in the core of Saudi Arabia, in alignment with the ‘Vision 2030’ initiative.

Expanding into Saudi Arabia’s Special Economic Zones (SEZs)

Saudi Arabia’s Special Economic Zones (SEZs), aimed at expediting economic diversification and enticing investors, feature unique commercial regulations. Encompassing various sectors such as biopharmaceuticals, automotive assembly, cloud computing, and logistics, these zones furnish investors with a foundation for both regional and international expansion.

What were the incentives for expanding into Saudi Arabia’s SEZs?

• Venturing into SEZs presents incentives aimed at streamlining business operations and boosting profitability, such as:
• A 5% Corporate Income Tax rate for up to two decades.
• No withholding tax on profit transfers from SEZs to foreign countries.
• Customs duties deferral or complete waiver on capital equipment and inputs within SEZs.
• Supportive Saudization regulations, particularly in the initial 5 years.
• No VAT on goods exchanged within and between SEZs.
• Avoidance of double taxation through special tax treatments aligned with OECD principles.
• Competitive utility rates, notably for electricity.
• Exemption from operational fees within SEZs for employees and their families.

Adhering to Saudization Quotas (Nitaqat)

Nitaqat, initiated by the Ministry of Labor and Social Development, focuses on empowering Saudi nationals, ensuring their active participation in the nation’s economic growth. The objective is to reduce unemployment among Saudis and decrease dependence on foreign labor. In essence, all businesses in Saudi Arabia, including foreign-owned companies, must maintain a specific number of Saudi nationals in their workforce.