E-commerce Sector Authorities, Regulations and Laws in Saudi Arabia

Saudi Arabia's e-commerce sector has experienced remarkable growth, with the market size reaching approximately $8.7 billion in 2023, up from $7 billion in 2022.

This expansion is driven by an almost 100% internet penetration, smartphone usage, and supportive government initiatives.

However, entering this market necessitates a thorough understanding of the regulatory landscape and compliance with local laws.

Essential Regulations for E-Commerce Businesses

Compliance with the following regulations is vital for e-commerce operations in Saudi Arabia:

1. E-Commerce Law

Enacted in 2019, the E-Commerce Law governs online transactions, aiming to enhance consumer protection and boost confidence in electronic commerce.

Key Provisions:

• Obligation to provide clear product information and terms of service.
• Protection of consumer data and privacy.
• Mechanisms for addressing consumer complaints and disputes.

Why It Matters:

Adherence to the E-Commerce Law is mandatory for all online businesses to ensure fair trading practices and consumer trust.

2. Anti-Cyber Crime Law

This law addresses crimes related to information systems and cyber activities, aiming to enhance information security.

Key Provisions:

• Penalties for unauthorized access to data systems.
• Measures against online fraud and breaches of privacy.

Why It Matters:

E-commerce businesses must implement robust cybersecurity measures to protect against cyber threats and comply with legal requirements.

3. Data Protection Regulations

Saudi Arabia has established guidelines to protect personal data, ensuring that businesses handle consumer information responsibly.

Key Provisions:

• Requirements for obtaining consumer consent before data collection.
• Obligations to secure stored data against breaches.

Why It Matters:

Compliance with data protection regulations is essential to maintain consumer trust and avoid legal penalties.

Key Regulatory Authorities in Saudi Arabia's E-Commerce Sector

Global businesses aiming to establish e-commerce operations in Saudi Arabia must engage with several governmental authorities to ensure compliance with local regulations.

1. Ministry of Commerce (MoC)

The Ministry of Commerce (MoC) is the primary authority overseeing commercial activities, including e-commerce, within Saudi Arabia.

Key Responsibilities:

• Issuance of Commercial Registration (CR) certificates for businesses.
• Enforcement of the E-Commerce Law and its implementing regulations.

Why It Matters:

Obtaining a Commercial Registration is mandatory for legal business operations in the Kingdom. The MoC ensures that e-commerce businesses comply with national standards and consumer protection laws.

2. Ministry of Investment of Saudi Arabia (MISA)

The Ministry of Investment of Saudi Arabia (MISA) facilitates foreign investment and assists global businesses in establishing operations within the Kingdom.

Key Responsibilities:

• Issuance of investment licenses for foreign e-commerce companies.
• Providing support and guidance throughout the business setup process.

Why It Matters:

Securing an investment license from MISA is a critical step for foreign e-commerce firms to operate legally in Saudi Arabia. MISA offers valuable resources to navigate the local business environment.

3. Zakat, Tax, and Customs Authority (ZATCA)

The Zakat, Tax, and Customs Authority (ZATCA) manages taxation and customs procedures, ensuring businesses comply with fiscal policies.

Key Responsibilities:

• Administration of VAT registration and compliance.
• Collection of zakat and tax from businesses operating within the Kingdom.
• Oversight of customs duties for imported goods.

Why It Matters:

E-commerce businesses must adhere to tax regulations, including VAT registration and zakat contributions, to operate legally and maintain good standing.

4. Communications and Information Technology Commission (CITC)

The Communications and Information Technology Commission (CITC) regulates the ICT sector, including internet services vital for e-commerce operations.

Key Responsibilities:

• Licensing of telecommunications and IT services.
• Ensuring cybersecurity standards are met.
• Regulating data privacy and protection.

Why It Matters:

E-commerce platforms rely on robust ICT infrastructure. Compliance with CITC regulations ensures secure and reliable online operations.

5. Saudi Food and Drug Authority (SFDA)

For e-commerce businesses dealing in food, pharmaceuticals, or medical devices, the Saudi Food and Drug Authority (SFDA) oversees the safety and quality of these products.

Key Responsibilities:

• Regulation and approval of food and drug products.
• Monitoring and inspection of imported goods.

Why It Matters:

Ensuring that products meet SFDA standards is crucial for legal compliance and consumer safety.

Essential Regulations for E-Commerce Businesses

Compliance with the following regulations is vital for e-commerce operations in Saudi Arabia:

1. E-Commerce Law

Enacted in 2019, the E-Commerce Law governs online transactions, aiming to enhance consumer protection and boost confidence in electronic commerce.

Key Provisions:

• Obligation to provide clear product information and terms of service.
• Protection of consumer data and privacy.
• Mechanisms for addressing consumer complaints and disputes.

Why It Matters:

Adherence to the E-Commerce Law is mandatory for all online businesses to ensure fair trading practices and consumer trust.

2. Anti-Cyber Crime Law

This law addresses crimes related to information systems and cyber activities, aiming to enhance information security.

Key Provisions:

• Penalties for unauthorized access to data systems.
• Measures against online fraud and breaches of privacy.

Why It Matters:

E-commerce businesses must implement robust cybersecurity measures to protect against cyber threats and comply with legal requirements.

3. Data Protection Regulations

Saudi Arabia has established guidelines to protect personal data, ensuring that businesses handle consumer information responsibly.

Key Provisions:

• Requirements for obtaining consumer consent before data collection.
• Obligations to secure stored data against breaches.

Why It Matters:

Compliance with data protection regulations is essential to maintain consumer trust and avoid legal penalties.

Compliance Essentials for E-Commerce Businesses

To operate successfully in Saudi Arabia's e-commerce sector, companies must ensure compliance with the following regulatory requirements:

1. Commercial Registration (CR): Obtain a CR certificate from the Ministry of Commerce (MoC) to legally conduct e-commerce activities.
2. Investment Licensing: Foreign companies must secure an investment license from the Ministry of Investment (MISA) to legally operate in Saudi Arabia.
3. E-Commerce Law Compliance: Adhere to the rules governing online transactions, product information, and dispute resolution.
4. Data Protection: Ensure compliance with data privacy laws and CITC guidelines to protect customer information.
5. Cybersecurity: Implement security measures to protect online platforms and safeguard payment gateways from cyberattacks.
6. Saudization Quotas: Meet local hiring quotas as required under the Nitaqat Program, especially for logistics and customer service roles.
7. VAT Registration: Register for VAT with ZATCA, issue VAT-compliant invoices, and file tax returns on time.
8. Customs Compliance: Ensure timely customs clearance for imported goods by adhering to ZATCA and SFDA import regulations.

Looking to establish or grow your e-commerce business in Saudi Arabia?

AstroLabs can support your entry with licensing, business setup, and regulatory compliance.