Translation of the attached article:
Foreign investment is one of the key factors that helps strengthen the Saudi economy, especially since Saudi Arabia is distinguished by its large market size and diversified economy, which makes it an attractive factor for foreign investors.
It also encourages international companies to move their regional headquarters to Saudi Arabia in order to benefit from the promising investment opportunities available in the Kingdom. In this article, we will explain the conditions for investing in Saudi Arabia for foreigners, the steps that must be followed, and other related information.
Conditions for Investing in Saudi Arabia for Foreigners: When Do You Need an Investment Registration from the Ministry of Investment?
There are certain conditions that must be complied with to facilitate and regulate foreign investment in the Kingdom. These conditions are as follows:
Compliance with Licensing Conditions:
To ensure that the foreign investor complies with the Saudi system, they must comply with the controls and conditions stated in the license application form.
The Activity Must Not Be Among the Excluded Activities:
There are activities that the Kingdom excludes from foreign investment, and an annual report on these excluded activities is issued by the Ministry.
No Judgments Issued Against the License Applicant:
No criminal judgments must have been issued against the license applicant in commercial or financial matters inside or outside the Kingdom, in order to protect competition and maintain the market.
Do You Need a Saudi Partner, or Can You Own 100%?
The presence of a Saudi partner is mandatory for the foreign investor in some cases, the most prominent of which include:
- If the commercial activity is prohibited or restricted from being 100% owned by the foreign investor.
- Liberal professions that require a professional license, such as law or accounting, where the Saudi partner’s share must not be less than 25%.
- If you wish to obtain certain advantages in specific government tenders according to foreign investment laws.
What Legal Entities Are Available for Investment in Saudi Arabia?
There are several entities and activities available for investment in Saudi Arabia, the most prominent of which include:
- Trade.
- Industry.
- Real estate development.
- Contracting.
- Bids for government projects.
- Advertising and publicity.
- Printing presses.
- Selling and producing computer software.
- Scientific and technical offices.
- Senior management consulting.
- Consulting engineering offices.
- Vocational and technical training.
- Energy projects, such as data review and building auditing, and providing engineering design services for energy efficiency solutions.
- Financial services.
- Mining.
- Aviation and handling services.
- Catering and food services.
- Foreign law firms.
- Regional headquarters.
- Insurance and reinsurance.
Basic Documents and Requirements Before Starting Investment
Obtaining a commercial register for foreign investors is an essential step to give the commercial activity legal status. To obtain it, the following documents must be submitted:
- A valid passport of the investor or authorized manager.
- Documents related to the parent company.
- A copy of the investment license issued by the Ministry of Investment.
- An executive summary of the commercial activity intended to be practiced in the Kingdom.
- An approved financial report proving financial solvency, or the latest audited financial statements of the parent company.
- An official power of attorney if a legal representative is completing the procedures on behalf of the investor.
- An ownership or lease contract proving the existence of a headquarters for the commercial activity in the Kingdom.
Establishing a Company Under an Investment License: Practical Steps from the Beginning to the Commercial Register
Establishing a company under an investment license is an electronic service provided by the Ministry of Commerce through the Saudi Business Center platform. It is completed by following these steps:
- Access the Saudi Business Center platform.
- Choose “Establishing a Company Under an Investment License.”
- Fill in the required data, such as the activity, capital, partners’ data, and management.
- Authenticate the contract electronically through the Absher platform.
- After the contract is authenticated, the commercial register is issued directly.
Because the commercial register is an essential step after the investment license, it is important to learn how to open a commercial register before starting your activity in Saudi Arabia.
Investment Fees in Saudi Arabia: What Is Actually Paid?
Foreign investment fees in the Kingdom are estimated based on the size of the project and the type of activity. They are divided as follows:
- The fees for issuing a commercial register start from SAR 2,000 per year.
- Government license fees vary depending on the type and size of the activity, but in some cases they may reach up to SAR 62,000.
- Profit tax is estimated at 20%.
- License renewal fees.
- Chamber of commerce subscription fees.
- Variable additional costs, such as social insurance fees.
Conditions for Investment in Saudi Arabia for Residents: What Differs from Non-Residents?
A resident must comply with certain conditions specified by the relevant regulations to start investing, which are as follows:
- The activity they wish to practice must be within the list of activities approved by the Saudi government.
- They must be qualified to practice investment in Saudi Arabia, and must be a natural, sane person with experience in the field.
- The field in which they wish to invest in the Kingdom must be compatible with all international and regional agreements concluded by the Kingdom with other countries.
- The specifications of raw materials and products must comply with the Kingdom’s regulations.
- The investor must not have a criminal record in their home country, or have final judgments issued against them regarding a violation of the regulations in the country of origin.
- The investor must not have received a judicial ruling regarding commercial or financial violations or crimes in the country of origin, outside it, or inside the Kingdom.
- They must comply with all regulations, laws, international agreements, and applicable instructions in the Kingdom.
Why Is Nawaf bin Awad Al-Harbi Law Firm the Best Choice for Investors?
Investment in Saudi Arabia requires a precise understanding of the laws and legal and regulatory procedures related to establishing projects and practicing investment activities. This is where the importance of seeking the assistance of a specialized legal firm appears, as it helps the investor make the right decisions from the beginning and avoid potential obstacles and risks.
Nawaf bin Awad Al-Harbi Law Firm provides integrated legal services for local and foreign investors, including consultations related to the conditions for investing in Saudi Arabia, choosing the appropriate legal entity, reviewing investment contracts and agreements, and following up on the legal procedures and licenses required to practice the activity.
Thanks to its experience in Saudi commercial and investment regulations, the firm seeks to provide practical legal solutions that support project success and protect investors’ rights throughout the different stages of investment.
Contact now with the best companies and establishments lawyer to obtain specialized legal consultations regarding investment in Saudi Arabia, follow up on investment licensing procedures, choose the appropriate legal entity, and ensure compliance with all legal conditions and requirements to establish your project with confidence and security.
Conclusion
Knowing the conditions for investing in Saudi Arabia is important for any foreigner who wants to benefit from the promising investment opportunities in the Kingdom. The Kingdom provides highly promising investment opportunities to attract the largest number of investors and encourage investment in the sectors and activities available for investment.
Because the foreign investor becomes obligated to comply with financial and tax regulations after starting the activity, it is important to know how to file a tax return to ensure proper compliance.
Frequently Asked Questions
What Is the Difference Between Foreign Investment and Foreign Direct Investment in Saudi Arabia?
Foreign investment is a general concept that refers to the entry of foreign capital into the Kingdom in any form, such as establishing a factory or purchasing small shares. Foreign direct investment, however, is a special case that occurs when the foreign investor owns a share of no less than 10% of the voting rights in a Saudi company, which enables them to influence its management and decisions.
Is There a Minimum Capital Requirement Under the Conditions for Foreign Investors in Saudi Arabia?
Capital requirements vary depending on the size and nature of the activity and its geographical location. Some targeted sectors, such as the technology sector and renewable energy, receive full or partial exemptions to stimulate investment in promising areas.
What Are the Obligations of the Foreign Investor After Obtaining the License?
After obtaining the license, the foreign investor is obligated to fully comply with the main purposes and conditions under which it was issued. No amendments may be made to them except after obtaining prior approval from the Ministry of Investment and completing the required procedures.
