How to open a company in Saudi Arabia as a foreigner

Saudi Arabia is rapidly strengthening its position as one of the Middle East's leading investment hubs. Consistent economic reforms, large-scale public investment, and legislative liberalization have made the Kingdom an attractive jurisdiction for international companies considering the region as a platform for long-term business development.

Successfully entering the Saudi market requires not only an understanding of the local business environment but also careful compliance with all legal procedures. From choosing the organisational and legal form to obtaining the necessary permits—each stage of registration affects the project launch timeline, the level of legal risks, and the efficiency of the company’s future operations.

Advantages of Opening a Company in Saudi Arabia

Today, Saudi Arabia holds a special place on the Middle East’s investment map. The large‑scale economic transformation under the Vision 2030 programme has turned the Kingdom into one of the most dynamically developing jurisdictions for international business. For foreign companies, this means access not only to a large market but also to participation in the structural overhaul of entire economic sectors.

The Region’s Largest Market and High Demand Capacity

Saudi Arabia is the largest economy in the Middle East, with a population of over 35 million and a significant share of government spending in GDP. This creates steady demand for goods and services across a wide range of industries: from construction and infrastructure to healthcare, education, technology, and retail. Government procurement also plays a substantial role, remaining a key driver of economic activity.

Vision 2030 Programme and Large‑Scale Megaprojects

The key factor behind the transformation is the Vision 2030 programme, aimed at diversifying the economy and developing non‑resource sectors. The implementation of megaprojects—such as NEOM, Red Sea Global, and Qiddiya—is creating new markets and industries, including smart cities, tourism, renewable energy, and high‑tech infrastructure. For foreign companies, this offers access to long‑term contracts and large‑scale investment projects.

Possibility of 100 % Foreign Ownership

One of the most significant changes in recent years has been the liberalisation of the foreign ownership regime. In a number of sectors, investors can establish companies with 100 % foreign ownership provided they hold a licence from the Ministry of Investment of Saudi Arabia (MISA). This allows international companies to fully control their business without the mandatory involvement of a local partner.

Competitive and Predictable Tax System

Saudi Arabia’s tax model combines corporate tax for foreign companies and a zakat system for local entities. At the same time, there is no personal income tax, which makes the country attractive for international teams and regional headquarters. Additionally, VAT and withholding tax regimes are in place, but the overall system remains transparent and well‑structured.

Strategic Geographic Location

Saudi Arabia lies at the crossroads of trade routes between Asia, Africa, and Europe. This enables the country to be used as a regional logistics and distribution hub. Its well‑developed port and transport infrastructure reinforces its role in global supply chains and international trade.

Government Support for Investors

The Ministry of Investment of Saudi Arabia (MISA) actively supports foreign projects, simplifying market entry and providing access to investment programmes, industrial zones, and government initiatives. In some cases, investors may receive additional incentives within priority economic sectors.

Long‑Term Stability of Reforms and Predictability

One of the key advantages is the systematic nature of the reforms. Changes to the economy and regulation take place within a long‑term national strategy, ensuring a predictable investment environment and reducing regulatory uncertainty.

Regulatory Framework

The legal framework for business registration by foreign investors in Saudi Arabia is based on a combination of investment, corporate, and commercial legislation. In recent years, the regulatory base has been significantly modernised as part of the Vision 2030 national strategy, which aims to enhance the country’s investment attractiveness and liberalise conditions for foreign capital access.

The key regulatory act is the updated Investment Law, adopted by Royal Decree No. M/19 (22 July 2024) and effective from 12 February 2025. It replaced the Foreign Investment Law of 10 April 2000. Unlike the previous regulation, the new law applies to both national and foreign investors, enshrining the principle of equal legal standing. The law guarantees non‑discriminatory access to investment activities, protection of investments against unlawful expropriation, the right to freely transfer profits and capital, and the ability to participate in investment projects in virtually all economic sectors, except for activities included in the list of restrictions for foreign investors.

A significant legislative change has been the shift from a mandatory licensing system for foreign investments to a registration‑based regime. Under Article 7 of the Investment Law, a foreign investor must register with the Ministry of Investment of Saudi Arabia (MISA) prior to commencing investment activities. After the information is entered into the national investor registry, the company may proceed to obtain a commercial registration and complete further procedures in accordance with sector‑specific legislation.

Corporate aspects of operations are governed by the Companies Law, which came into force in 2023. It defines the permissible organisational and legal forms of legal entities, the procedure for their establishment, requirements for corporate governance, shareholding distribution, participants’ liability, and company liquidation. The law permits the creation of entities with 100 % foreign ownership in most economic sectors, subject to compliance with investment legislation requirements.

Alongside investment and corporate legislation, foreign investors must comply with other regulations, including the Labour Law, tax legislation, anti‑money laundering (AML) rules, know‑your‑customer (KYC) requirements for identifying ultimate beneficial owners, and specific sectoral regulations if operating in licensed fields. Failure to comply with these requirements may result in registration refusal, administrative penalties, or restrictions on the right to conduct business activities.

Business Structures

Saudi Arabian legislation offers foreign investors several business models, each tailored to different investment objectives.

Limited Liability Company (LLC)

The most common organisational and legal form for foreign investors is the limited liability company (LLC). This structure is used by most international companies entering the Saudi Arabian market due to the combination of flexible corporate governance and limited liability for participants.

An LLC is a separate legal entity, and the liability of its founders is limited to the amount of their contributions to the authorised capital. In most types of economic activity, 100 % foreign ownership of the company is permitted without the mandatory involvement of a local partner. The law also allows the establishment of a company by a single participant, which has significantly simplified market entry for foreign entrepreneurs following the 2023 corporate law reforms.

Joint Stock Company (JSC)

A joint stock company is primarily intended for implementing large investment projects, raising substantial capital, and subsequently listing shares on the stock market.

Compared to an LLC, this form entails a more complex corporate governance system, the requirement to have a board of directors, and higher disclosure requirements. JSCs are typically chosen by large industrial enterprises, financial institutions, and international corporations planning long‑term business development in Saudi Arabia or access to capital markets.

Simplified Joint Stock Company (SJSC)

One of the most notable innovations in the Companies Law is the introduction of the simplified joint stock company (SJSC). This form combines the advantages of a traditional joint stock company with a high degree of flexibility in corporate governance.

The SJSC is primarily aimed at startups, technology companies, venture projects, and joint ventures that need mechanisms to attract investment without the complex procedures typical of traditional joint stock companies. The law grants founders broad discretion to determine the management structure and the distribution of corporate rights.

Branch Office of a Foreign Company

A foreign company may operate in Saudi Arabia through a branch without establishing a new legal entity. In this case, the branch is treated as a structural unit of the parent company and does not have independent legal personality.

The main advantage of this model is the ability to conduct commercial activities on behalf of the foreign company while maintaining a unified corporate structure. However, all obligations of the branch are borne directly by the parent company, meaning there is no limitation of property liability. This form is most in demand among construction, engineering, consulting, and service companies implementing projects in the Kingdom.

Regional Headquarters (RHQ)

As part of the Vision 2030 programme, the Saudi government is actively developing the institution of regional headquarters for international corporations. This structure is designed for companies coordinating the activities of their subsidiaries in the Middle East and North Africa.

Establishing a regional headquarters provides access to a range of government incentives and is important for companies planning to participate in major government projects and collaborate with public sector clients. At the same time, RHQ activities are subject to special requirements from the Ministry of Investment and are not intended for regular commercial activities in the domestic market.

Guide to Company Registration in Saudi Arabia

Step 1. Determine the Type of Activity

The first step is to select the type of economic activity. This determines whether 100 % foreign ownership is possible, whether additional permits are required, the minimum capital requirements, and the list of government agencies involved in the registration process.

Certain sectors, including financial services, insurance, telecommunications, healthcare, and some types of industrial production, are governed by special laws and require approval from relevant government bodies. Moreover, some strategic activities remain restricted for foreign investors.

Step 2. Register the Foreign Investor with MISA

The next step is to register the foreign investor with the Ministry of Investment of Saudi Arabia (MISA). Under the new Investment Law, registration with MISA confirms the right of a foreign entity to carry out investment activities in the Kingdom.

Registration begins with preparing a set of corporate documents. The specific list depends on the company’s organisational and legal form, type of economic activity, and applicant status. However, for most foreign legal entities, the following package of documents is required:

• a copy of the Certificate of Incorporation or extract from the foreign company’s commercial register, certified by a competent authority and legalised in the prescribed manner;
• the company’s founding documents (Memorandum and Articles of Association or their equivalent);
• the foreign company’s financial statements for the latest financial year, certified in accordance with the requirements of the country of registration;
• a resolution by the foreign company’s authorised body to establish a subsidiary or branch in Saudi Arabia;
• a Power of Attorney for the representative authorised to carry out registration actions on behalf of the foreign investor;
• information on ultimate beneficial owners (UBOs) and the company’s ownership structure;
• copies of passports of founders, directors, or other authorised representatives;
• documents confirming compliance with special requirements if the activity falls under licensed or regulated sectors of the economy.

Most foreign corporate documents must be consularly legalised or otherwise recognised in accordance with international agreements applicable to the country of origin of the documents. Although MISA may, in some cases, accept documents without translation, certain Saudi government authorities may require an official Arabic translation during subsequent registration procedures.

Step 3. Choose the Organisational and Legal Form

After obtaining investment registration, the organisational and legal form of the future company is determined. The choice of structure affects the corporate governance system, disclosure requirements, the extent of participants’ liability, and the procedure for attracting investment.

Step 4. Establish the Company and Obtain Commercial Registration

Once the founding documents are prepared, the company undergoes registration with the Ministry of Commerce of Saudi Arabia. At this stage, the charter is approved, a company director is appointed, and a Commercial Registration (CR) is issued—the main document confirming the creation of the legal entity.

It is from the moment of obtaining the Commercial Registration that the company acquires the status of an independent legal entity, gaining the right to enter into contracts, open bank accounts, acquire property, and conduct business activities.

Step 5. Enrol in Government Registries

After the legal entity is registered, the company must undergo mandatory registration in government information systems. Depending on the nature of its activities, it is registered for tax purposes, enrolled in the social insurance system, connected to the services of the Ministry of Human Resources and Social Development, and obtains the necessary sector‑specific permits.

At this stage, employers must also consider the requirements of the Saudization (Nitaqat) programme, which sets a minimum quota for the employment of Saudi nationals.

Step 6. Open a Corporate Bank Account

The final step is to open a corporate bank account. Banks conduct a comprehensive review of the company as part of KYC (Know Your Customer) and AML (Anti‑Money Laundering) procedures, analysing the ownership structure, source of capital, and details of ultimate beneficial owners.

Tax Reporting and Payments

After company registration, a foreign investor must comply with Saudi Arabia’s tax legislation. Tax administration is carried out by the Zakat, Tax and Customs Authority (ZATCA), which is responsible for taxpayer registration, receipt of tax returns, monitoring compliance with tax obligations, and conducting tax audits. The main regulatory acts include the Income Tax Law, the VAT Law, transfer pricing rules, and ZATCA by‑laws.

Registration with Tax Authorities

After obtaining a Commercial Registration (CR), the company must register in the ZATCA information system. Upon registration, the taxpayer is assigned a Tax Identification Number (TIN), which is used to fulfil all tax obligations, including filing returns and paying taxes. For foreign companies, registration for income tax purposes is mandatory.

Corporate Income Tax

Foreign legal entities and companies with foreign participation pay corporate income tax. The basic rate is 20 % of the taxable profit attributable to the share of foreign participants. If the company has a mixed ownership structure, the share of profit belonging to Saudi or other shareholders from Gulf Cooperation Council (GCC) countries is subject to zakat, while the share of foreign investors is subject to income tax.

The tax return is filed at the end of the financial year based on the self‑assessment principle. Typically, the return and final payment must be submitted within 120 days after the company’s financial year ends. In some cases, the legislation requires the payment of advance tax instalments.

Value Added Tax (VAT)

Companies carrying out taxable operations must register as VAT payers once they reach the threshold established by law, or voluntarily if they meet the registration conditions. The standard VAT rate is 15 %.

VAT returns are submitted monthly or quarterly, depending on the taxpayer’s annual turnover. The calculated tax amount is paid simultaneously with the submission of the return.

Withholding Tax

When making payments to non‑residents, including dividends, interest, royalties, and payments for consulting, technical, and management services, a company may be required to withhold tax at source (Withholding Tax). The rate depends on the nature of the income and the provisions of any applicable double taxation treaties.

Accounting and Tax Reporting

Companies are required to maintain accounting records in accordance with applicable financial reporting standards, keep primary documentation, and ensure the accuracy of financial data. For certain categories of companies, the law mandates an audit of the annual financial statements, which must be submitted together with the tax return.

Additionally, taxpayers must comply with the electronic invoicing system (Fatoora) implemented by ZATCA. The use of electronic invoices is mandatory for most commercial organisations and serves as one of the main tools for tax control.

Comprehensive support during the company registration phase, structure selection, and tax registration can significantly reduce operational and legal risks and accelerate business launch in Saudi Arabia. In this regard, specialised business consultants and brokers who support investors at all stages of entry into the jurisdiction play a crucial role. For more information on business registration in Saudi Arabia, contact the REAB business broker.