Although Saudi Arabia has gained considerable momentum as one of the hottest hubs for entrepreneurship, actually securing the first riyal in your pocket can be a lengthy ordeal for any foreign entrepreneur, typically taking several months or even a year to accomplish. 

In fact, even if you are fortunate enough to work with a good partner, it can take more than three months to incorporate and land in the country legally. The procedure is not only costly and time-consuming, but much of the details surrounding the foreign investment system in the oil-rich peninsula are still shrouded in obscurity. 

In this article, as part of our Saudi Expansion series, we aim to shed light on the ‘big rocks’ of the foreign investment mechanism in the Kingdom, with a primary focus on tangible benefits and key features. In the future, Tawaref plans to release more pieces detailing the cost element and end-to-end process of landing in KSA.

Benefits of Investing in Saudi Arabia

Let’s face it, the traditional benefits of Saudi Arabia, like economic and currency stability, strategic location, and the vibrant business landscape, have already been talked about. In this section, we will discuss certain programmes and opportunities that any entrepreneur can directly benefit from.

Regional headquarters (RHQ) programme: 

Multinational corporations that establish their regional base in Saudi Arabia receive multiple benefits, including: 

• Withholding and corporate income tax waived for up to 30 years
• 10-year Saudization exemption
• Premium residency for executives
• Unlimited employee work permits

This is subject to certain requirements that prove that it is a functioning headquarters, like the residency of the regional GM, number of employees, percentage of revenue, etc.

Tech entrepreneurial licence

Specifically geared towards startups, tech entrepreneurs can get a low-cost track to Saudi Arabia. Under this licence, they are exempt for five years from the annual SAR60,000 fee that all investors have to pay otherwise.

As Tawaref specialises in Saudi Arabian landings for entrepreneurs, we will talk about how to obtain this licence as well as its various benefits in detail in upcoming articles. 

Access to real estate 

Under a foreign investment licence, entrepreneurs can buy properties for corporate purposes. With the impending EXPO 2030 and 2034 FIFA World Cup, real estate is expected to boom over the next decade. So, even if you are a foreign investor in the textile business, you can indirectly benefit from the appreciating real estate market, which can be extremely profitable in the long run. 

Government incentives

Saudi Arabia is just like any other market, where certain sectors are booming much more than others. If you are part of one of the roadmap’s eleven programs that are experiencing great growth, like health sector transformation, housing, or quality of life (hospitality and tourism), you can get access to untapped markets where there are a lot of deep pockets ready to offer you amazing government incentives. 

For example, you want to build a hotel in Saudi Arabia. There is a Tourism Development Fund that may lend up to 20–30 per cent of your total CapEx. Made in Saudi is another visibility-boosting initiative that supports local businesses in the Kingdom. Through this programme, companies can get credit lines for international exports, get free access to sponsored global exhibitions to showcase their products, and more. These are just two examples. Every second key government agency offers such incentivised programmes tailored to provide relevant industry businesses with the resources they need to expand.

For any entrepreneur or business owner interested in coming to Saudi Arabia, considering Vision 2030 and its provided ‘deep pocket’ incentives is paramount. In this series, Tawaref plans to publish specific articles on each program to showcase in greater detail the many benefits that are all within hand’s reach.

Key features of KSA’s foreign investment regime

• Single Jurisdiction

All Saudi Arabian businesses operate under one single jurisdiction, with the same laws and regulations applied to all parts of the country. This extends to both Saudis and non-Saudi residents, with very minimal operational and legal differences in implementation based on background. This is in stark contrast with neighbouring GCC countries, where there are multiple jurisdiction options offered to businesses even in the same city. 

Under a single jurisdiction system, there is just one compliance point of contact, a factor that provides legal certainty for any business. With the same company registration, your business can operate anywhere in the country, with no preference based on province. You will be subject to the same fees, saudization quota, or Iqama cost. There is also no difference in government procurement, taxes, hiring, or residence. You can virtually work in Jeddah, live in Riyadh, and hire in Madinah. 

• Permissions and prohibitions

Most sectors that were historically barred are now eligible for foreign investment. The only key prohibited sectors are oil and gas exploration, military and security-related operations, real estate development in Makkah and Madina, Hajj guidance services, and certain recruitment services. 

In addition, women-led businesses are a very real possibility. Now, women can own businesses without the required presence or involvement of any mahram (male guardian).

• Capital requirements

Almost no businesses in Saudi Arabia have any major capital requirements, except for real estate development, which requires SAR30 million. This used to be the case for any type of company, but now we even see startups successfully landing with just SAR10,000. Tech startups (through entrepreneurial licences) have a very minimum capital requirement, and you can virtually open a company with nothing in your pocket.

• Legal structures allowed In Saudi Arabia

With some exceptions for tech entrepreneurs and premium residents, foreign investors are also not allowed to open a company under their own name. Instead, the company must be a branch of its active parent business. To be eligible, the company must have been running for at least one year (previously, it was three years) in its home country. It is strongly preferred that this company generate positive cash flow. 

Foreign investors are welcome to establish most types of businesses in Saudi Arabia. The most common are LLCs (limited liability companies) and JSCs (joint stock companies).

Stay tuned for the next episode to navigate your way into Saudi market