The Kingdom has been working to develop its tourism industry and become a progressive nation by allowing foreigners to hold 100% of their companies as part of the 2030 vision. Currently, a significant intensification of the foreign investment flow to the Kingdom of Saudi Arabia (KSA) can be observed.
WHY SET UP A COMPANY IN SAUDI ARABIA?
There is no doubt that KSA is a market with a huge buying capacity and potential. The following are the factors that make the KSA stand out on the global landscape:
- Environmental safety: The World Bank reports that Saudi Arabia continues to have a high vaccination rate, reaching 68% of the population. Also, Saudi Arabia continues to play a crucial role globally in correcting oil market imbalances under the Organization of the Petroleum Exporting Countries (OPEC)+ arrangement.
- Market size: The rebound is mostly driven by increased oil production, which is anticipated to increase by 13% in 2023 after the end of the OPEC+ production curbs in December 2023. The non-oil sector is anticipated to maintain its current growth trajectory, with an estimated 4% in 2023.
- Intense economic development: Stronger private consumption is predicted, along with an increase in religious tourism and higher domestic capital spending—signaled through the PIF and other state agencies—despite headwinds from tighter fiscal and monetary policy in the medium term.
OVERVIEW OF THE KSA BUSINESS MARKET
The fastest-developing industries in Saudi Arabia are expected to boost the nation’s economy. You too can profit from the country’s success as a business owner. Your chances of business success increase because of improved industry growth tactics in nations like Saudi Arabia. Professionals can continuously determine which industries are thriving, thanks to industry reports. It is vital to stay informed on the industries that will yield the most profits to benefit from these new prospects.
SAUDI ARABIA INDUSTRY SECTORS:
- Real Estate: The real estate sector is a key pillar of the Kingdom’s vision for a vibrant society. With a significant young population and steady demand, Saudi Arabia has taken steps to transform the real estate sector. The 70% home ownership goal set by Vision 2030 has provided a new incentive to the attractiveness of the real estate sector, along with the government’s strong commitment to involving the private sector in this journey. The government provides significant support to the development of the sector by improving technology uptake in the entire value chain, enhancing transparency through publishing real estate indicators online, launching the Developers Services Centre (Etmam), and providing innovative financing solutions, with the aim to create an attractive investment environment.
- Oil and Gas: Saudi Arabia’s energy sector is the country’s economic backbone, thanks to a large and well-established industrial base. The Kingdom’s thriving economy is expected to fuel extraordinary demand across all market sectors and intensify efforts to promote sustainable development and energy efficiency. Moreover, through major government support and private sector investments, Vision 2030 aims to increase market demand for solar, wind, tidal, and other renewable energy sources to meet over 50% of the energy mix.
- Industrial and manufacturing: Saudi Arabia is one of the world’s fastest-growing countries in the manufacturing sector, with a 7.5% average growth every year. The sector is at the forefront of the Kingdom’s economic diversification, localization, and privatization efforts. It is now the third largest non-oil contributor to the Saudi economy. Key factors in the growth of the manufacturing industry are the large market size, developed R&D facilities, government support, modern infrastructure, and business-friendly regulations.
Following are some lucrative sectors for doing business in Saudi Arabia for foreigners:
- Tourism and hospitality
- Steel manufacturing
- Engineering and technology
- Real estate
- Lubricants, glass, and plastics
- Education
- Healthcare and pharmaceutical
- Financial services
- Media and entertainment
HOW CAN EXPATS OWN 100% OF THEIR BUSINESS IN SAUDI ARABIA?
The Ministry of Investment of Saudi Arabia (MISA), announced in 2015 that it would encourage international companies to set up 100% foreign-owned trading companies. Shortly after the announcement of Saudi Vision 2030 in June 2016, the Saudi Council of Ministers adopted a regulation implementing this change. Early indications are that only very large international companies (especially those that employ a significant number of Saudi nationals) are 100% foreign-owned. Saudi companies can be differentiated based on their structure ownership (GCC or non-GCC nationals owned) as it defines the regulatory authorities or a process of incorporation, and the taxation standards applicable to the relevant business.
What will be required to consider when setting up your Saudi company in case it is planned to be fully owned by an expat:
- An established company in a home country that is operational longer than 1 year.
- A positive financial result of the company above.
- The audited financial report of the last year of business operations.
ACTIVITIES PROHIBITED FOR FOREIGN INVESTORS IN SAUDI ARABIA
The ideology of Saudi firing ownership rules are as follows:
- Service-related activities are free and very accessible to foreign ownership.
- Trading activities are subject to a significant share capital requirement of SAR 30,000,000.
- Most professional activities require 25% of Saudi ownership.
The list of prohibited activities includes but is not limited to:
- Defense and military equipment manufacturing including uniforms and related devices
- Security services and investigation agencies
- Brokerage companies in real estate
- Oil and gas drilling and exploration
- Fishery business
- Real estate investment in Medinah and Makkah
- Printing and publication business
TAKEAWAY/CONCLUSION
There are various procedures and requirements that you need to prepare and take into consideration for your Saudi Arabia commercial registration. From selecting the right structure for your company, to drafting the correct documentation, to office registration, visa services, banking support, accounting, bookkeeping, payroll, and tax services, Creation Business Consultants will help you throughout the entire process. Our team of Corporate Structuring experts will leverage our experience to help simplify the process while simultaneously providing you with all the details needed to set up your company in Saudi Arabia and the GCC. Contact our Corporate Structuring Department for your free expert consultation on your Saudi Arabia entity, email [email protected] or call Saudi Arabia +966 54 511 2494 UAE +971 4 878 6240 today.
