How Indian Companies Can Set Up a Business in Saudi Arabia

Saudi Arabia offers Indian companies opportunities across technology, consulting, engineering and manufacturing. This guide explains the main business setup routes, incorporation steps, tax obligations and compliance requirements to consider before entering the Kingdom.

Saudi Arabia’s growing economy and expanding private sector are creating opportunities for Indian companies looking to establish a presence in the Middle East. Bilateral trade between India and Saudi Arabia exceeded $40 billion in 2023–2024, reflecting the commercial ties between the two markets.

This guide outlines the main steps for setting up a business in Saudi Arabia from India.

How to Set Up a Business in Saudi Arabia from India

Setting up a business in Saudi Arabia involves several steps, from choosing the right legal structure and securing the necessary licenses to completing tax registrations and meeting ongoing compliance requirements. The following steps outline what Indian companies need to consider when establishing their presence in the Kingdom.

1. Choose the Right Business Setup Route

The appropriate route depends on your company's stage of development, business activity and existing corporate structure.

Startup route: Eligible early-stage companies, including some technology startups, may qualify to establish a Saudi entity without an existing parent company. Eligibility and documentation requirements apply.

Regular enterprise route: Established Indian companies can establish a Saudi subsidiary linked to their existing business. This route may suit companies operating in technology, consulting, engineering, construction and professional services.

Before proceeding, assess your eligibility and any applicable overseas investment and reporting requirements in India.

2. Obtain the Required Licenses and Registrations

The incorporation process typically begins with obtaining the relevant investment license from the Ministry of Investment of Saudi Arabia (MISA), where applicable, followed by the company's Commercial Registration (CR).

The documents required depend on the establishment route but may include:

• Certificate of incorporation of the Indian parent company
• Memorandum and Articles of Association
• Audited financial statements
• Additional supporting documents required for the selected activity or license

For a detailed overview, consult this guide to setting up a business in Saudi Arabia.

Obtaining a commercial registration in Saudi Arabia establishes the company's legal identity, but further registrations are needed before it can operate fully.

3. Complete Post-Incorporation Registrations

After incorporation, companies must establish their operational and compliance infrastructure. Depending on their activities and workforce, this may include:

• Registration with the Zakat, Tax and Customs Authority (ZATCA)
• General Organization for Social Insurance (GOSI) registration
• National Address registration
• Relevant Ministry of Human Resources and Social Development registrations
• Government portal setup and General Manager visa processing, where applicable

Completing these requirements helps businesses prepare for hiring, payroll and day-to-day operations.

4. Understand Saudi Arabia's Tax Obligations

Indian companies should assess their Saudi tax position before finalizing their corporate structure.

Key considerations include:

• Corporate income tax: The taxable share of profits attributable to non-Saudi ownership is generally subject to a 20% corporate income tax rate, subject to applicable rules.
• Withholding tax: Certain payments to non-residents, including royalties and management or technical service fees, may attract withholding tax. The India–Saudi Arabia tax treaty may affect the applicable treatment.
• Transfer pricing: Transactions between related Indian and Saudi entities must comply with applicable transfer pricing rules.
• Value-added tax (VAT): Saudi Arabia applies a standard VAT rate of 15%. Mandatory registration generally applies when annual taxable supplies exceed SAR 375,000, subject to the applicable rules.

Companies should also establish a compliance calendar covering relevant tax returns, withholding tax filings and VAT submissions.

Understand India's Overseas Investment Regulations

Indian businesses looking to establish operations in Saudi Arabia must ensure their investment structure complies with India's overseas investment framework.

Investments generally need to support a legitimate commercial purpose and be directed toward an eligible foreign entity, such as an incorporated company or limited liability partnership (LLP).

India's framework distinguishes between two main forms of overseas investment:

• Overseas Direct Investment (ODI): Typically applies to investments that establish or support a business presence abroad.
• Overseas Portfolio Investment (OPI): Applies to qualifying overseas investments that fall outside the ODI category, in accordance with the relevant rules.

For Indian companies, entering the Saudi market requires aligning business objectives with the Kingdom's licensing, tax and operational requirements while ensuring the investment structure complies with India's overseas investment regulations.

Addressing these considerations early can help businesses navigate incorporation more efficiently and establish a solid foundation for long-term growth.