Saudi Arabia

Company Formation in Saudi Arabia

Saudi Arabia is ideally located to cater to the fast growing market with a large population in Asia. YourGlobalPro can assist in Saudi Arabia for Company Formation, Secretarial Compliance, Tax Registration, VAT Reclaim, Document Retrieval and Trademark Registration.

About the Country

The Kingdom of Saudi Arabia (KSA), is an Arab sovereign state in Western Asia constituting the bulk of the Arabian Peninsula and is fifth-largest state in Asia and second-largest state in the Arab world. The country is sharing border with Jordan and Iraq to the north, Kuwait to the northeast, Qatar, Bahrain and the United Arab Emirates to the east, Oman to the southeast and Yemen to the south. The below content will explain you in detail about the requirements for the company formation in Saudi Arabia, know more about the process of trademark registration in Saudi Arabia and understand the Saudi Arabia Legal Compliance requirements.

Saudi Arabia

Doing Business Introduction

The Country is the middle-east biggest economy. The KSA Government has established the Saudi Arabian General Investment Authority (“SAGIA”) to assist foreign investors in the approval process for operating in KSA and facilitating all services under one umbrella.

As per Doing business report of The World Bank –Saudi Arabia ranks 94 for 2017 survey. YourGlobalPro professionals are able to assist its client with any type of company formation in Saudi Arabia, trademark registration in Saudi Arabia and other recurring services for your business in Saudi Arabia.

Incorporation - Types of Business Entities

There are several types of entities that can be incorporated in Saudi Arabia are as mentioned below:

  • General Partnerships
  • Limited partnerships
  • Joint Ventures
  • Corporations
  • Partnerships Limited by Shares
  • Limited Liability Partnerships (LLCs)
  • Variable Capital Companies
  • Cooperative Companies (Joint Stock Company)

Time Frame for Incorporation of Company in Saudi Arabia varies from depending on the type of entity selected. Each business type has its own advantages and disadvantages. YourGlobalPro professionals estimate the time required for the process of Company formation in Saudi Arabia to be completed is 20-25 working days.

Benefits of Registration of a Company

Below are the advantages of company formation in Saudi Arabia:

  • A stable currency pegged to the US Dollar
  • Stable interest rates
  • Low taxes
  • 100% foreign ownership of property and companies in certain industries
  • Lower minimum capital requirements
  • No restriction on repatriation of capital
  • The ability for foreign investors to sponsor foreign employees
  • Tax incentives if the company is registered in certain economic cities
  • No currency exchange restrictions in KSA
  • Substantial business opportunities stemming from a population with relatively high-income levels
  • Prolonged political stability
  • Strategic geographic location

Tax Registration and Filing

The principal taxes in the Kingdom of Saudi Arabia are income tax, Islamic tax on wealth known as Zakat and withholding tax. Income tax is assessed on profits of the entities.

Corporate Income Tax Rate In Natural Gas Investment - 30 to 85%
Oil and Hydrocarbon Production - 85%
Other Companies - 20%
Capital Gains Tax Rate 20%
Dividends 5%
Interest 5%
Royalties 15%
Fiscal Year, Tax Year 1 January to 31 December
Tax Registration Required to register with the Department of Zakat and Income Tax (DZIT) before the end of their first fiscal year. (excluding nonresidents who derive income from a source in Saudi Arabia and are subject to final withholding tax)
Withholding Tax To Pay DZIT within the first 10 days of the next month
Annual Withholding Tax Return To be filed within 120 days following the end of the tax year.
Annual Tax Declaration To file its annual tax declaration and pay tax with the DZIT within 120 days

Double Tax Treaty

Double Tax Agreements regulates the tax treatment of income or capital gains in situations where the same taxpayer is taxed twice in two countries for the same subject. Saudi Arabia has double taxation treaties with Austria, Italy, Singapore, Azerbaijan, Japan, South Africa, Bangladesh, Korea (South), Spain, Belarus, Luxembourg, Syria, China, Malaysia, Tunisia, Czech Republic, Malta, Turkey, France, Netherlands, Ukraine, Greece, Pakistan, United Kingdom, Hungary, Poland, Uzbekistan, India, Romania, Vietnam, Ireland and Russian Federation.

Trademark registration

In Saudi Arabia for trademark registration application needs to be made to the Trademark Office. It takes approximately 10-12 months’ timeframe to complete the trade mark registration process. In Saudi Arabia, a Trademark Registration is valid for 10 Hijri years and a trademark may be renewed indefinitely about one month from the date of a renewal application. There is a grace period of six Hijri months (approximately six months in the Gregorian calendar) for late renewals with payment of a surcharge.

YourGlobalPro professionals are fully equipped to assist you with the trade mark registration process for your business in Saudi Arabia. For assistance or advice in the matter of the trade mark registration or intellectual property – please feel free to write or contact us.

Secretarial Compliance

Below are some of the important points in relation to Company Secretarial Compliance in Saudi Arabia:

  • MOCI requires that all companies and establishments with capital that exceeds SR100,000 to maintain books of account which includes Daily Journal, General ledger, Inventory book – locally in Arabic in KSA.
  • Financial statements should include auditor’s report, balance sheet, statements of income, cash flows and changes in the shareholder’s equity and notes to the financial statement
  • All records must be maintained & kept for 10 years
  • The business location must be registered with the municipality of Riyadh with an identification code number.
  • All entities must register for social security insurance. The employer must open a file with the General Organization for Social Insurance (GOSI).
  • Preliminary approval from the relevant authorities
  • In case of any changes in the constitution of the entities application need to be made to SAGIA along with prescribed fees.

Accounting Services

The Entities in Saudi Arabia are required to prepare Accounts in local GAAP, in the Arabic language and denominated in the Saudi Riyals. Also, Computerized accounting systems are allowed, provided that they comply with the requirements of the MOCI and that Arabic printouts of the accounts.

YourGlobalPro professionals can assist you with the entire bookkeeping and accounting services to your Saudi Arabia Business Setup as per your business needs including implementation of financial accounting software, accounting records preparation and time to time preparation of budgets, forecasts.

Auditing service

In Saudi Arabia, Companies are required to have annual independent audits. All the Joint stock companies and limited liability partnerships must appoint at least one independent auditor – who should be a certified public accountant member of the Saudi Organization for Certified Public Accountants “SOCPA” and licensed within KSA from MOCI.

Based on the size of the business – the companies are required to prepare and file financial statements with the Authority. YourGlobalPro professionals can provide you auditing services as required by your business.

Banking

It is recommended to open account with a local bank when working in Saudi Arabia. Further, Banking facilities are very advanced, and most main banks offer internet and telephone banking.

The documentation requirement differs from Bank to Bank and need to be complied for the Bank account opening.  The major banks in Saudi Arabia are Arab National Bank, Al Rajhi Bank, SABB, Riyad Bank, Saudi American Bank, Saudi Investment Bank. All banks are stable, reliable and offer the same level of services.

YourGlobalPro professionals can facilitate all the paper work in relation to banking need and can assist you in opening bank account for your business plan in Saudi Arabia.

Legal and Compliance

In Saudi Arabia, the responsibility of legal compliance is not a one-time affair, but a continuous process. Below is the various Saudi Arabia legal and compliance requirement to be followed by incorporated entities:

  • The publicly-held and limited liability companies are required, on an annual basis, to file copies of the board of directors’ report and audited financial statements with the MOCI within six months after their financial year-end.
  • The manufacturing entities are required to file a performance report including financial and operational ratios.
  • Unless covered by a double tax treaty – Relief is not provided for foreign taxes paid.
  • Zakat is a religious levy imposed on the shareholders in Saudi Arabian companies that are Saudi or GCC nationals.
  • Saudi Arabia does not impose foreign exchange controls.
  • Abide by all the laws and regulations prevailing in the KSA including, without limitation, the Labour and Workmen Law; the Social Insurance Law; the Zakat and Income Tax Law; the Customs Law; the ProIslamic Sharia Proceedings Law; the Penal Proceedings Law; the Law Firm Law; laws governing the commercial registration of companies and commercial fraud and controlling banking activities; laws governing the protection of intellectual property
  • YourGlobalPro professionals can assist you in Saudi Arabia Legal and compliance requirements.

HR and Employment Law and Immigration / VISA

In KSA, the Labour and work affairs in KSA are regulated by the Work and Workmen Regulations (“Labour law”) which was issued by a Royal Decree in 2005. Below are some of the important points in relation to HR & employment law in Saudi Arabia:

  • Work contracts should be in two copies, one for the employer and the other for the employee.
  • The non-KSA employee, the employee’s contract should be in writing specifying the work duration.
  • no minimum wage standard in the KSA Labour Law.
  • An employee should not work for more than eight hours a day and forty-eight hours a week.
  • During the month of Ramadan, the actual working hours for Muslims shall be reduced to a maximum of six hours a day or thirty-six hours a week.
  • Salaries to be transferred via Wage Protection System” (WPS).
  • Workers unions and collective bargaining are currently prohibited in KSA
  • The total contribution for annuity branch (pension annuity) with respect to Saudi nationals is 18%.
  • All foreign nationals must obtain valid entry visas to enter Saudi Arabia, with the exception of GCC nationals.
  • Work visas are issued to foreign workers who come to Saudi Arabia to work under employment contracts with local employers for a maximum initial period of two Hijra years.
  • Residence permits [called iqamas and must be carried at all times] are issued after arrival in Saudi Arabia to those entering the country with work visas.

Country Statistics

Capital Riyadh
Largest City Riyadh
Total Area 2,149,690 Sq. Km.
Population 33,000,000
Density 15 / Sq. Km.
Currency Saudi Riyal (SR) (SAR)
Government Unitary Islamic Absolute Monarchy
Official Language Arabic
Religion Islam
Government Offices Hours Saturday to Wednesday - 07:30 to 14:30
Business Offices Hours Saturday to Wednesday - 8:00 to 12:00 and 15:00 to 18:00
Banks and Exchange Houses Hours Saturday to Wednesday - 9:00 to 12:00

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