As part of the reforms launched in the wake of Vision 2030, Saudi Arabia has liberalised its rules and regulations regarding the formation of companies in the country by both foreigners and locals. The reforms have facilitated company formation in Saudi Arabia and significantly promoted foreign investment in the country. Among the significant reforms contributing to excellent foreign investment is the permission to start a business in Saudi Arabia with 100% foreign ownership, eliminating the need for a local partner. It has permitted greater control of the company by the foreign investor. The reforms have permitted foreign investors to choose different types of business entities or structures to start their companies in Saudi Arabia.
The Saudi Vision 2030
Vision 2030 of Saudi Arabia is a government development program launched by the Kingdom that aims to achieve the goal of greater economic, social, and cultural diversification. It aims to create a vibrant environment for local and international businesses through critical reforms, fostering a more inclusive business landscape.
What types of companies can foreigners choose from in Saudi Arabia?
Choosing the proper business structure for your company is vital. The chosen company should have an in-depth structure permitting adaptability, flexibility, and growth in the long run. It is also essential that your company establish long-term business growth plans.
The New Companies Regulation of Saudi Arabia allows the following business entities for both local and foreign businesspeople. Foreigners can have 100% ownership of their company. Foreigners can choose from a variety of business structures, including:
- Subsidiary of a Foreign Company
- Regional Headquarters (RHQ)
- Technical and Scientific Services Office (TSSO)
- Establishment/sole proprietorship
- Limited partnership company
- Joint venture
- Joint stock company
- Limited liability Company.
The most common form of legal entity in Saudi Arabia is an LLC, which a single shareholder can register. This business form may have up to 50 shareholders and require capital, depending on the business activity imposed by local authorities. Foreigners can have 100% ownership of their company.
Challenges and opportunities in Business Setup for foreigners
A) Challenges
Starting a business in Saudi Arabia as a foreign investor can be challenging, but it also presents opportunities for an enterprising entrepreneur. Here are some key challenges and opportunities a foreigner needs to be aware of.
- Complex Regulatory Environment: Saudi Arabia has a complex regulatory environment. Therefore, it is essential to be familiar with multiple business operations laws and regulations.
- Language Barrier: The Kingdom’s mother language is Arabic, and not speaking Arabic can create communication challenges.
- Cultural Differences: Saudi Arabia has a unique culture, and foreigners may need to adapt to local customs and business practices.
- Restrictions on Foreign Ownership: Until recently, foreigners were limited to owning no more than 49% of a business. However, the Saudi government has introduced reforms to allow 100% foreign ownership in specific sectors.
- Bureaucracy: Setting up a business in KSA involves engagement with multiple government agencies, which can be a time-consuming process.
- Limited Skilled Labour Pool: Finding skilled labour in specific sectors can be challenging. Consider offering competitive salaries and attractive benefits to support development and attract and retain top talent.
B) Opportunities for foreigners for KSA Business Setup
- Growing Economy: Saudi Arabia has a rising GDP of over $800 billion.
- Vision 2030: The Saudi government’s Vision 2030 plan aims to diversify the economy and launch new business opportunities.
- Investment Incentives: The Saudi government offers various investment incentives, including tax breaks, subsidies, and financing options.
- Strategic Location: Saudi Arabia has access to larger markets in the Middle East, Europe, and Asia.
- Skilled Workforce: Saudi Arabia boasts a skilled and educated workforce comprising many talented young individuals.
How does the Helpline Group help a foreigner set up a business in Saudi Arabia?
Helpline Group, backed by strong and experienced professionals, brings over 25 years of expertise in company formation, offering a seamless, hassle-free experience for clients, including foreigners.
Our experts possess the best knowledge of the latest rules and regulations, ensuring compliance and operational efficiency.
With a global presence and a tailored approach, we ensure that your business setup is handled with precision and professionalism, making us your reliable ally in achieving success.
