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How to Expand into Saudi Arabia

Find all the information and requirements you’ll need to expand your business into Saudi Arabia. There are 3 main stages to setting up a legal entity in Saudi including 16 steps to complete the full process. AstroLabs acts on your behalf to navigate this complex and time-consuming process, managing third parties and ensuring you are aligned with all requirements needed to help your company expand into the Kingdom quickly and seamlessly. 

Stage 1 :

Foundations of the Legal Entity

This stage is the prerequisite to any of the following stages. It provides your foreign company permission to own a business in Saudi Arabia, through the MISA investment license, and to gain legal registration of that business through Commercial Registration. 

 

GM Visa Transfer to Iqama (Residency)

The GM Working Visa is a one-time entry to KSA that will at this stage be transferred to an Iqama (Residence Permit). The local employer applies and secures the work permit and Iqama so that the employee can legally work and live in KSA. The employer is considered the local sponsor. An Iqama is issued to expatriates who arrive in KSA with a work visa. The term of employment is limited to the amount of time listed on the work permit. This is currently set at one year for work at private companies, but there is an option to renew the permit after one year. More information on residency permits. The Iqama card is the essential ID for expats working in Saudi Arabia. It is also known as a Muqeem card and is the most important document you will have in the kingdom, without it you will not be able to live or work in the country. Once you have your Muqeem card, the company will add you to their Muqeem portal which enables re-entry visas to be issued and the renewal of residence permits.



Opening a Bank Account

This is the final step of the process. After gathering all the required documents, the process of opening a bank account is initiated. Each bank is different in terms of speed and customer service. Standard requirements from the banks:

  • AoA of the parent company
  • A document authorizing the GM to open and manage the bank account (if not mentioned already as an authority in the AoA of the local company)
  • The AoA of the local company
  • ID copy of the GM
  • Some banks require an in-person visit to the local company’s office
  • Some standard forms and applications from the bank



 

In order for your legal entity to be authorized to hire people, there are certain steps that must be taken such as registration with the Ministry of Labor (MoL), and the General Organization of Social Insurance (GOSI). This stage would also allow your General Manager (GM) to have a one-time GM visa issued, allowing them to travel to KSA.

Stage 2 :

Authorization to Hire Staff

Chamber of Commerce (CoC) Registration

The Chamber of Commerce (CoC) is a key platform that all local companies use heavily. Many of the government processes and papers require attestation from the Company’s Chamber of Commerce. The great thing is that almost all of the Chamber of Commerce processes can be done online after the activation of the account. The Chamber of Commerce Account will be activated if it is signed by an authorized signatory who has a PoA from the parent company.



Registration with General Authority of Zakat and Tax (GAZT)

MISA entities are subject to taxation in Saudi Arabia. Below is an indicative guide, but we recommend you seek advice from a tax lawyer to discuss your company’s particular requirements. ​

  • 20% tax on net profit for the portion of the company owned by non-Saudi entities
  • 15% VAT (starting July 2020)
  • A KSA company that has both KSA/GCC and non-KSA/GCC shareholders is subject to corporate income and Zakat (2.5% on the adjusted net profit or adjusted net asset value (Zakat base)) on a proportionate basis.
For a detailed guide to tax developments in Saudi, visit Deloitte tax@hand or for a more comprehensive guide, please refer to their 2019 International Tax Highlights and visit the official GAZT website. An LLC is the most common form of legal entity chosen by foreign investors. The Ministry of Commerce and Investment (MoCI) issues a commercial registration certificate before the LLC is considered fully registered. After the incorporation, various governmental files and documents must be applied for in order for the LLC to be fully operational. A branch operates on behalf of the parent company (foreign registered company) and has no separate legal existence in KSA. Registration of a branch in relation to issuance of the foreign investment license by MISA and the commercial registration certificate by MoCI follows the same general procedure as that of an LLC. The parent company of the branch has liability for the branch's activities that it undertakes in KSA. The paid-up capital for a branch does not confer limitation of liability as compared to an LLC. With regard to tax and a number of other matters, a permanent branch is treated in the same manner as a 100% foreign-owned LLC.



Registration with Social Insurance (GOSI)

As a foreign company established in Saudi Arabia, you must comply with Saudization law as this is monitored by the General Organization for Social Insurance (GOSI) on a monthly basis. Generally, if you have 5 employees or less, you are only required to hire one Saudi national. Once you exceed 5 employees, you will have to follow the Saudization Nitaqat system based on your size and industry. After getting your General Manager's visa, and converting it to a residency (Iqama), you will not be able to hire any more non-Saudis before hiring at least 1 Saudi at any position the business sees fit. The employer must contribute 12% of the Saudi employee’s salary to GOSI and the employee contributes 10%. Find out more on GOSI.



GM Visa Issuance

The GM Working Visa issued is a one-time entry to KSA that will then be transferred to a residence permit (Iqama).



 

Stage 3 :

Acquiring Residency and Opening a Bank Account

This is the last stage of the process that will allow your General Manager to become a resident of Saudi Arabia. This includes all the required steps from completing a health check, acquiring health insurance, Muqeem registration, and the issuance of residency. Upon the completion of this stage, the GM can then start the process of opening a bank account for the company. 

GM Visa Transfer to Iqama (Residency)

The GM Working Visa is a one-time entry to KSA that will at this stage be transferred to an Iqama (Residence Permit). The local employer applies and secures the work permit and Iqama so that the employee can legally work and live in KSA. The employer is considered the local sponsor. An Iqama is issued to expatriates who arrive in KSA with a work visa. The term of employment is limited to the amount of time listed on the work permit. This is currently set at one year for work at private companies, but there is an option to renew the permit after one year. More information on residency permits. The Iqama card is the essential ID for expats working in Saudi Arabia. It is also known as a Muqeem card and is the most important document you will have in the kingdom, without it you will not be able to live or work in the country. Once you have your Muqeem card, the company will add you to their Muqeem portal which enables re-entry visas to be issued and the renewal of residence permits.



Opening a Bank Account

This is the final step of the process. After gathering all the required documents, the process of opening a bank account is initiated. Each bank is different in terms of speed and customer service. Standard requirements from the banks:

  • AoA of the parent company
  • A document authorizing the GM to open and manage the bank account (if not mentioned already as an authority in the AoA of the local company)
  • The AoA of the local company
  • ID copy of the GM
  • Some banks require an in-person visit to the local company’s office
  • Some standard forms and applications from the bank



Get in touch with us for more information.

One of our specialized team members will be in contact to assist you. 

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