Advantages of registering a Saudi company

Friendly environment: Currently, Saudi Arabia is committed to opening its doors to the world and welcoming foreign tourists and investors. The country's rulers have pledged to create a friendly environment for the kingdom's diverse future. Saudi citizens are known for their friendly attitudes, and their hospitality attracts foreigners to invest in the country.

Government support: The Saudi government provides foreign investors with various preferential policies and support measures, including tax exemptions, land leasing, market access, etc., to attract more international companies to invest.

Rich resources: As one of the world's largest oil exporters, Saudi Arabia has abundant oil and natural gas resources, providing huge development opportunities for foreign-funded enterprises in energy and related industries.

Geographical advantages: Located in the heart of the Middle East, Saudi Arabia connects many important economic regions such as Europe, Asia and Africa, providing convenience for foreign-funded enterprises to expand their markets.

Company Type

Typically, there are 5 types of company structures from which investors can choose the preferred company type for investment. The following are the most effective company types for investors:

1. Partnership Limited

2. Limited Partnership

3. Joint Venture

4. Stock Corporation

5. Limited Liability Company (LLC)

Among these 5 types of company formation, Limited Liability Company, also known as Saudi subsidiary, is considered to be one of the most popular company types for foreign investors. Below we mainly introduce the registration of Limited Liability Company.

Company Registration Conditions

Company name: Brand name + business scope, suffix optional, unlimited.

Registered capital: The minimum capital investment required to establish a limited liability company is 500.000 Saudi Riyals.

Number of shareholders: The number of shareholders must have 1 to 50 shareholders and be managed and represented by one or more managers. There is no board of directors, although shareholders often provide for a board of directors and other management arrangements in the company's articles of association. However, if there are more than 20 partners, the company must establish a "board of directors". Saudi partners are not required because there is no legal limit on the percentage of foreign ownership.

Company audit: LLCs must also have an auditor.

Shareholder requirements: Both natural persons and legal entities can be shareholders. Shareholders are generally liable for company debts only to the extent of their respective interests in the company's shares.

LLC Registration Process

1. Apply for foreign investment permit.

2. Have documents notarized and authenticated.

3. Register a company and obtain a business registration certificate.

4. Register with the Chamber of Commerce.

5. Register with various tax authorities.

6. Register with the Ministry of Labor and Social Development.

7. Open a bank account.

Saudi Taxation

1. Value-added tax: 15%. In accordance with the requirements of the Gulf Cooperation Council VAT Unification Agreement, Saudi Arabia promulgated the VAT Implementation Regulations approved by Resolution No. 3839 of the General Administration of Taxation on September 5, 2017, stipulating that VAT will be levied from January 1, 2018 at a rate of 5%. In May 2020, Saudi Arabia raised the standard VAT rate from 5% to 15%.

2. Corporate income tax (foreigners): 20%. The standard tax rate for Saudi corporate income tax is 20%, which applies to resident companies, non-Saudi resident natural persons, and non-resident companies or non-resident taxpayers engaged in business activities through permanent establishments.

Zakat tax (GCC members): 2.5%. It is only levied on Saudi citizens, also known as "Zakat". Taxpayers include all Saudi individuals, shareholders of companies whose shares are held by Saudi citizens, and Saudi shareholders in Saudi-foreign joint ventures. The basis for taxation is all assets of the taxpayer and all income, profits, dividends, bonuses, etc. generated by business activities, and the tax rate is 2.5%.

3. Consumption tax: Saudi Arabia has imposed consumption tax since June 2017, and the taxable objects are specific goods such as tobacco products, soft drinks and energy drinks.

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