Business Setup in KSA Mainland: For Service and Trading Sectors

The Kingdom of Saudi Arabia (KSA) offers a wide array of opportunities for global entrepreneurs and business enterprises looking to tap into the rapidly expanding markets of the Middle East. Backed by progressive economic policies, the Ministry of Investment in Saudi Arabia (MISA) holds significant roles in facilitating business setup in KSA mainland, making the region particularly enticing for both service and trading sectors.

Why Choose KSA for Business?

KSA’s business environment is uniquely characterized by its welcoming approach toward foreign investments. Here, international business owners can relish the benefits of 100% ownership without the requirement for local partnership, which stands as a considerable advantage over other regional business regulations.

Obtaining a Service License in KSA

A. Eligibility Criteria for Service License

1. Pre-existing License Requirement: Applicants must hold an existing business license.

2. Age of the Business: The existing license should denote a business operation of one year or more.

3. Corporate Form and Activity Consistency: The businesses must engage in the same activities.

4. Corporate Form Requirement: The business must be incorporated as a “Limited Liability Company (LLC)”.

5. Stakeholder Participation Requirement: Applicants seeking the KSA Mainland license must be one of the shareholders in the existing foreign business.

B. Eligibility Criteria for Trading License

1. Multiple Licensing Requirements: Applicants must hold three licenses in three different countries.

2.Corporate Form Requirement: The business must be incorporated as a “Limited Liability Company (LLC)”.

3. Corporate Form and Activity Consistency: The businesses must engage in the same activities.

4. Minimum Age Requirement for Business: At least one of these businesses should have been operational for more than a year.

5. Stakeholder Participation Requirement: Applicants seeking the KSA Mainland license must be one of the shareholders in the existing foreign business.

Steps to Obtain Service and Trading License

1.     Prepare the essential documents including the existing business license. Documents must be translated into Arabic, attested, and notarized.

2.     Submit Audit reports as it is also necessary.

  1. Provide Power of Attorney to the client, the client must sign the POA and send it back.
  2. Submit the notarized documents.
  3. Apply for MISA – One-year investor license can be sought via MISA without having to mention the company name or business initially.
  4. Register in portals and e-channels
  5. Process the Commercial Register through the Chamber of Commerce for selecting company name and business activities.
  6. Apply for a general manager’s visa – Iqama alongside health and medical checks.
  7. Setup a bank account – Requires proof of location (Ejari), this varies from place to place.
  8. Apply for red tag for new company – Implementing the ‘red tag’ system for a new company allows the recruitment of employees, including mandatory hiring of Saudi nationals.

C. Cost and Duration of Service License

Achieving a service license involves varied costs ranging from AED 37k to AED 38k, covering the general manager’s visa and additional costs for employee visas, which typically range from AED 3k-4k. The entire process may span 2-3 months.

D. Business Considerations for Trading License

MISA mandates the demonstration of significant assets, investments, and properties (AED 27 million) to sustain business operations. Businesses have an allotment of 5 years to provide the said amount as paid up capital.

Conclusion

The future looks promising for foreign investors in KSA, with continuous enhancements in the business regulatory environment.

Many international corporations have successfully established large-scale operations, reflecting KSA’s welcoming stance towards foreign investment and its robust economic infrastructure.

Partner with Us!

Business setup in KSA Mainland can be a highly rewarding venture, provided that investors understand the legal landscape and cultural nuances in the region. Adam Global  provides invaluable support to  business owners and investors looking to start to broaden their business internationally. Book an appointment with us and our consultants will provide you with the comprehensive details you need for business setup in KSA Mainland.

Call us at +971 4 340 9701 or send us a WhatsApp at +971 501 4164

About The Author

Introducing Mr. Mohsin Abbas, Adam Global Director of Corporate Services. With a remarkable journey in his profession spanning over 11 years. Mr. Mohsin has cultivated a wealth of experience in Training and Business Development. His career in multinational corporations both in Dubai and India honed his expertise. Further enriching his professional repertoire in various facets of corporate services. Today, he stands as a beacon of knowledge and leadership in our team. Mr. Mohsin is poised to drive innovation and excellence in the realm of corporate services.

FAQs

What are the key benefits of setting up a business in KSA?

KSA offers significant advantages including 100% foreign ownership, no requirement for a local partner, and a supportive regulatory environment.

What is the importance of having a pre-existing license?

 It demonstrates the viability and legitimacy of your business, which is a critical factor for obtaining a new license in KSA.

How long does the process to obtain a service license take?

Typically, the process takes about 2-3 months, depending on the completeness and accuracy of the submitted documentation.

Can foreign entities hold 100% ownership in every sector?

Yes, in KSA, foreigners can hold 100% ownership in most sectors, with few exceptions in professional industries which usually require 25% of local ownership.

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